Latest news with #KeyFood
Atlantic
19-07-2025
- Business
- Atlantic
Why Zohran Mamdani Is Unlikely to Make Groceries Cheaper
Can the city of New York sell groceries more cheaply than the private sector? The mayoral candidate Zohran Mamdani thinks so. He wants to start five city-owned stores that will be 'focused on keeping prices low' rather than making a profit—what he calls a 'public option' for groceries. His proposal calls for opening stores on city land so that they can forgo paying rent or property taxes. Skeptics have focused on economic obstacles to the plan. Grocers have industry expertise that New York City lacks; they benefit from scale; and they run on thin profit margins, estimated at just 1 to 3 percent, leaving little room for additional savings. Less discussed, though no less formidable, is a political obstacle for Mamdani: The self-described democratic socialist's promise to lower grocery prices and, more generally, 'lower the cost of living for working class New Yorkers' will be undermined by other policies that he or his coalition favors that would raise costs. No one should trust that 'there's far more efficiency to be had in our public sector,' as he says of his grocery-store proposal, until he explains how he would resolve those conflicts. Mamdani's desire to reduce grocery prices for New Yorkers is undercut most glaringly by the labor policies that he champions. Labor is the largest fixed cost for grocery stores. Right now grocery-store chains with lots of New York locations, such as Stop & Shop and Key Food, advertise entry-level positions at or near the city's minimum wage of $16.50 an hour. Mamdani has proposed to almost double the minimum wage in New York City to $30 an hour by 2030; after that, additional increases would be indexed to inflation or productivity growth, whichever is higher. Perhaps existing grocery workers are underpaid; perhaps workers at city-run stores should make $30 an hour too. Yet a wage increase would all but guarantee more expensive groceries. Voters deserve to know whether he'll prioritize cheaper groceries or better-paid workers. (I wrote to Mamdani's campaign about this trade-off, and others noted below, but got no reply.) In the New York State assembly, Mamdani has co-sponsored legislation to expand family-leave benefits so that they extend to workers who have an abortion, a miscarriage, or a stillbirth. The official platform of the Democratic Socialists of America, which endorsed Mamdani, calls for 'a four-day, 32-hour work week with no reduction in wages or benefits' for all workers. Unions, another source of Mamdani support, regularly lobby for more generous worker benefits. Extending such benefits to grocery-store employees would raise costs that, again, usually get passed on to consumers. Perhaps Mamdani intends to break with his own past stances and members of his coalition, in keeping with his goal of focusing on low prices. But if that's a path that he intends to take, he hasn't said so. City-run grocery stores would purchase massive amounts of food and other consumer goods from wholesalers. New York City already prioritizes goals other than cost-cutting when it procures food for municipal purposes; it signed a pledge in 2021 to reduce greenhouse-gas emissions associated with food that it serves, and Mayor Eric Adams signed executive orders in 2022 that committed the city to considering 'local economies, environmental sustainability, valued workforce, animal welfare, and nutrition' in its food procurement. Such initiatives inevitably raise costs. Mamdani could favor exempting city-run groceries from these kinds of obligations. But would he? Batul Hassan, a member of the Democratic Socialists of America steering committee and a supporter of Mamdani, co-authored an article arguing that city-run stores should procure food from vendors that prioritize a whole host of goods: 'worker dignity and safety, animal welfare, community economic benefit and local sourcing, impacts to the environment, and health and nutrition, including emphasizing culturally appropriate, well-balanced and plant-based diets,' in addition to 'suppliers from marginalized backgrounds and non-corporate supply chains, including small, diversified family farms, immigrants and people of color, new and emerging consumer brands, and farmer and employee owned cooperatives.' If one milk brand is cheaper but has much bigger environmental externalities or is owned by a large corporation, will a city-run store carry it or a pricier but greener, smaller brand? Mamdani has said in the past that he supports the BDS (boycott, divestment, sanctions) movement, which advocates for boycotting products from Israel. That probably wouldn't raise costs much by itself. And Mamdani told Politico in April that BDS wouldn't be his focus as mayor. But a general practice of avoiding goods because of their national origin, or a labor dispute between a supplier and its workers, or any number of other controversies, could raise costs. When asked about BDS in the Politico interview, Mamdani also said, 'We have to use every tool that is at people's disposal to ensure that equality is not simply a hope, but a reality.' Would Mamdani prioritize low prices in all cases or sometimes prioritize the power of boycotts or related pressure tactics to effect social change? Again, he should clarify how he would resolve such trade-offs. Finally, shoplifting has surged in New York in recent years. Many privately owned grocery stores hire security guards, use video surveillance, call police on shoplifters, and urge that shoplifters be prosecuted. Democratic socialists generally favor less policing and surveilling. If the security strategy that's best for the bottom line comes into conflict with progressive values, what will Mamdani prioritize? This problem isn't unique to Mamdani. Officials in progressive jurisdictions across the country have added to the cost of public-sector initiatives by imposing what The New York Times 's Ezra Klein has characterized as an 'avalanche of well-meaning rules and standards.' For example, many progressives say they want to fund affordable housing, but rather than focus on minimizing costs per unit to house as many people as possible, they mandate other goals, such as giving locals a lengthy process for comment, prioritizing bids from small or minority-owned businesses, requiring union labor, and instituting project reviews to meet the needs of people with disabilities. Each extra step relates to a real good. But once you add them up, affordability is no longer possible, and fewer people end up housed. Policies that raise costs are not necessarily morally or practically inferior to policies that lower costs; low prices are one good among many. But if the whole point of city-owned grocery stores is to offer lower prices, Mamdani will likely need to jettison other goods that he and his supporters value, and be willing to withstand political pressure from allies. Voters deserve to know how Mamdani will resolve the conflicts that will inevitably arise. So far, he isn't saying.
Boston Globe
14-07-2025
- Business
- Boston Globe
A Massachusetts nonprofit got a $9.3 million shelter contract. A big chunk went to a board member's business.
Key Food won the job without submitting a written bid or even signing a written contract. Diaz's company doesn't appear on invoices Valley Opportunity Council regularly submitted to the state. Advertisement Officials with Massachusetts' Executive Office of Housing and Livable Communities, which oversees the state's shelter system, became aware Diaz was providing food last November, state officials said, after receiving an anonymous complaint. That was more than a year and half after the shelter opened. Stephen Huntley, executive director of Valley Opportunity Council, declined to say how much the nonprofit paid Diaz's company or how many meals were delivered to the shelter. But in a public audit, Valley Opportunity Council disclosed that in the fiscal year ending on June 30, 2024, the nonprofit spent $945,865 on food with a company that employed a board member. The vast bulk of it was for meals delivered to the Chicopee shelter, Huntley said. In the most recent fiscal year, the state budgeted $879,887 for meals at the shelter, but with just 55 families on average staying at the hotel, the final bill will likely be less, state officials said. Advertisement The shelter closed last month after just over two years in operation. In total, the state paid Valley Opportunity Council $9.3 million through the end of April to provide various services to shelter residents, including feeding them and helping them find more permanent housing. Huntley defended the nonprofit's use of Diaz's company. He said he called at least three other food vendors for prices, adding that, unlike the state, the nonprofit is not required to put out requests for bids. Some other vendors were only able to deliver food during the week, while others were more expensive, according to Huntley. Key Food charged $9.99 a meal, according to the state housing agency. 'You can't get that anywhere,' Huntley said. 'Should I have paid $20 for a meal and not paid a board member?' He declined to provide the names of the other companies he called for estimates. The nonprofit's board didn't vote on the arrangement, but was informed of it in April 2023 and updated routinely afterward, Huntley said. The nonprofit didn't sign a written contract with Key Food because 'we trust each other… . We had an oral agreement that was good enough,' Huntley said. The cost per meal Key Food charged was 'reasonable and appropriate,' said Tara Smith, a spokesperson for the state housing agency. But Mary Connaughton, chief operating officer for the Pioneer Institute, a Boston-based free-market think tank, said the opaque selection process and lack of paperwork raise all kinds of questions. Advertisement 'Unfortunately, the people living in the shelters and the taxpayers got a raw deal here,' Connaughton said. 'Even if the price were considered low, without a contract, where are the controls over the quality of the food being served? And how do the taxpayers footing the bill know their dollars were well spent without a formal bid?' Zuzanna Zaluga, a board member, confirmed to the Globe that the deal was disclosed to the board two years ago. She couldn't recall any discussion about a contract. Diaz's family operates two grocery stores in the Springfield area, one in Chicopee and another in Holyoke, which they have owned since 2003. The stores cater to the region's growing Latino population. Diaz has been on Valley Opportunity Council's board since 2019, but said his position didn't give him a leg up. 'They could have picked anyone; I'm glad they picked me,' Diaz said. 'We could use the extra income, and also, I'm glad to help.' His company initially provided peanut-butter sandwiches and other simple meals to a small number of families staying at the Quality Inn, but as the shelter population grew, so did their needs, Diaz said. Key Food eventually hired a Haitian chef to cook more hot meals, he said. Diaz said Key Food gave Valley Opportunity Council a discount because of the higher volume of customers: charging the nonprofit $1 less per meal than its usual $10.99 catering price. It is unclear how many meals Key Food delivered to the shelter over the course of the arrangement. In November, state officials visited the shelter after being alerted of the potential conflict. Advertisement During that visit, state officials 'determined the quality to be satisfactory,' Smith said. 'They also spoke directly with families who indicated they were satisfied with the food and had no complaints.' Governor Maura Healey's administration rapidly expanded the state's shelter system in 2023 in response to the skyrocketing number of homeless and migrant families in Massachusetts, and complaints and questions about food cost and quality soon followed. The state housing agency signed a or about $19.38 a meal — even though it received complaints about the quality of its food, state records showed. Caterers have told the Globe that Spinelli's rate was an outlier, and another state agency that also provided food to homeless shelters paid its vendors 30 percent less per meal. At its peak last year, the The state is ending the program and has been closing the shelters in recent months, with just In May, State Auditor Diana DiZoglio issued a scathing Her report highlighted Spinelli's contract. It concluded that Healey officials didn't provide enough oversight and overpaid the caterer. The audit did not look at how nonprofits such as Valley Opportunity Council managed taxpayer funds in their deals with subcontractors, or what kind of oversight the state provided for those arrangements. Advertisement The state's shelter contracts only require providers to inform their own governing boards of any potential conflicts of interests. There is no requirement that they inform the state. That was a mistake, said the Pioneer Institute's Connaughton. 'That's a weakness in the contract and poor oversight in my opinion,' she said. Deirdre Fernandes can be reached at
Miami Herald
12-06-2025
- Business
- Miami Herald
UNFI's split with Key Food will cost billions in potential sales and hundreds of jobs
United Natural Foods, Inc.'s disclosure this week that it is mutually ending its relationship with supermarket cooperative Key Food represents a costly course correction for the grocery distributor, which had been looking to the multi-year deal to drive billions of dollars in sales. Speaking to investors during an earnings call on Tuesday, UNFI CEO Sandy Douglas said the details of the agreement it signed with Key Food in 2021 "were very difficult," leading it to conclude that its best course of action would be to sever the contract. The company made the decision as part of a three-year project to identify opportunities to optimize its network, in part by adjusting its portfolio of distribution centers, Douglas said. "[A]ll our customers deserve that we don't have agreements where we're losing money because that hurts everybody," said Douglas, adding that the COVID-19 pandemic had an impact on transportation-related aspects of its deal with Key Food that made the arrangement unmanageable. "The decisions we made [were] based on a very factual analysis of the current situation, and at the end of exploration of all options that we might have been able to pursue to turn that agreement into a positive one," Douglas said. "And following all that, we chose to exit because it was the best decision for our shareholders, and I believe that Key Food made the same decision for the same reason." Taylor Ricketts, assistant vice president of RetailStat, said the fact that many of the locations under the Key Food umbrella are in densely populated areas was likely a key factor in UNFI's calculation. "The concept of chasing volume is very real … but I think with Key Foods, [UNFI] easily could have underestimated how expensive it would be to service stores in the inner city environment of New York City," Ricketts said. UNFI plans to wind down its contract with Key Food - which it had expected would bring in about $10 billion in sales over its 10-year term - in late September, according to a regulatory filing. The company expects to incur a $53 million contract termination fee, which will impact its free cash flow, UNFI President and CFO Matteo Tarditi said during the earnings call. UNFI is closing a 1.3 million-square-foot distribution center it opened in Allentown, Pennsylvania, in 2021 to serve Key Foods and other customers. The company intends to lay off more than 700 workers at the facility during a two-month period set to begin in mid-August, according to a notice the company filed with the Pennsylvania Department of Labor and Industry. UNFI also recorded a $24 million non-cash asset impairment charge during the third quarter of fiscal 2025 because of the closure. Ricketts said UNFI would have needed only a relatively small portion of the space in the distribution center to serve Key Food. "I think they thought they were going to get more growth in the market," he said. "It just didn't happen." Douglas said UNFI believes it has a $90 billion addressable market that spans natural, organic and other retailers that "are predominantly focused on a differentiation strategy." The company has looked at its business through the lens of its distribution centers as part of its efforts to identify avenues for growth, he said. The deal with Key Food posed a unique challenge for UNFI, because the customer and the distribution center "are inextricably linked," which is why the company concluded that it had to let go of the facility and the distribution deal, according to Douglas. Tarditi noted that closing the distribution facility will ultimately help the company save money by reducing expenses and releasing working capital. UNFI projects that the "payback period" will be a year or less, he said. "Our first goal when we see low performing distribution centers is to be able to find win-win solutions with our customers. And then if not, we need to take different actions," Tarditi said. UNFI is absorbing the impact of its decision to end its relationship with Key Food and shutter the Allentown facility as it contends with the fallout of a cyberattack that has severely impacted its ability to serve customers. Those customers include Whole Foods Market, which accounts for a significant share of UNFI's wholesale business. Copyright 2025 Industry Dive. All rights reserved.
Miami Herald
10-06-2025
- Business
- Miami Herald
UNFI's operations remain hobbled following cyberattack
Dive Brief: United Natural Foods, Inc. is currently serving customers on only a "limited basis" as it works to recover from an intrusion into its information technology systems that the company discovered last week, CEO Sandy Douglas said during the company's third-quarter earnings call Tuesday is working with other wholesalers to supply its grocery customers in some cases following the cyberattack, which forced UNFI to shut its network down entirely Friday evening, Douglas grocery wholesaler and retailer also disclosed Tuesday that it has mutually agreed with Key Food to end a long-term arrangement under which UNFI serves as the chief grocery wholesaler to that chain's stores in the Northeast. Dive Insight: UNFI's efforts to resume normal operations remain "a work in progress," and the company is working with customers in "various short-term modes," Douglas said. The company is working with authorities, including the FBI, as it works to bring its systems back online and determine why its information technology defenses failed, he added. "We use multiple different external benchmarks to assess ourselves and really hold nothing back in this area," Douglas said. "Having said that, we just got penetrated, so we will be continuing to look at every aspect of our defense, every aspect of how our tools are working, and what may be necessary to bolster it going forward, because it's clearly an area that requires a tremendous amount of focus from companies today." Asked whether customers would be able to break contracts with UNFI because of the cyberattack, Douglas said he was not in a position "to factually answer that question, even if I was inclined to disclose it." Douglas also said during the call that the company decided to terminate its contract with Key Foods, which it signed in 2021, because the arrangement was unprofitable. UNFI will stop distributing groceries at or around Sept. 20, UNFI said in a regulatory filing. UNFI will close its distribution center in Allentown, Pennsylvania, in connection with the dissolution of its deal with Key Foods, Douglas added. "We simply found that the combination of operational factors, post-COVID impacts and the details of that agreement were very difficult, and in collaboration with Key Food, we determined with them that the best possible scenario for everyone, given the facts at hand and the likely scenarios that emerge, was to exit the relationship in the market, and so we did so in an effort to optimize the results for them and for us," Douglas said during the call. UNFI's sales increased year over year by 7.5%, to $8.1 billion, during Q3. The company posted a net loss of $7 million for the quarter, down from $21 million during the same period a year ago. Sales for UNFI's retail division, which includes the Shoppers and Cub Foods supermarket chains, rose by less than 1% year over year in Q3, to $573 million. Copyright 2025 Industry Dive. All rights reserved.
Business Insider
06-06-2025
- General
- Business Insider
I ranked 4 store-bought barbecue sauces. My favorite was also the least expensive.
I ranked four different store-bought barbecue sauces from worst to best. They all paired well with chicken nuggets, though some were thicker and more flavorful than others. I liked the barbecue sauces from Sweet Baby Ray's the most, including the no-sugar-added variety. Barbecue season is here, so I made it my mission to find out which brand delivers the tastiest barbecue sauce straight from the bottle. I tried store-bought barbecue sauces from three different brands to determine which offered the smokiest, tangiest flavor for the best value. I also tried one brand's no-sugar-added version to see if it could measure up to the original. While barbecue isn't typically my go-to sauce for all things dipping — proud ranch fan, here — I tried each of the sauces on their own and with chicken nuggets to see which sauce was my favorite. Here's how I'd rank four store-bought barbecue sauces, from worst to best. My least favorite barbecue sauce was Kraft's slow-simmered original barbecue sauce. The sauce is made with ingredients like tomato, molasses, and hickory smoke. It cost $4.19 for an 18-ounce bottle at my local Key Food supermarket in Brooklyn, New York. The sauce wasn't as thick as the other brands I tried. The sauce was light and tangy, but it didn't have a strong enough flavor for me. Compared to the other brands, I thought this barbecue sauce was lacking. I typically go for a thick, smoky barbecue sauce, and this was much lighter. I think I would struggle to fully coat chicken or ribs in this more viscous sauce, though I did enjoy the flavor. It was tangy and slightly sweet, with a honey-like flavor, but reminded me more of a sweet-and-sour sauce than a true barbecue sauce. I also tried KC Masterpiece's American Original barbecue sauce. The sauce is made from molasses, onions, and spices to deliver an authentic Kansas City-style barbecue sauce. Aside from any store discounts, this barbecue sauce was the cheapest I tried. An 18-ounce bottle cost $2.89 at my local Key Food supermarket in Brooklyn, New York. KC Masterpiece's was the thickest sauce I tried. I thought this sauce was a good balance of smoky and sweet. The sauce had a robust, smoky flavor and a consistency that easily clung to the chicken nugget, making for a balanced bite that overtook my tastebuds. It was really sweet, very much tasting of molasses. However, I was missing that slight tangy flavor that would have really taken this sauce over the edge and provided a more dynamic flavor profile. Up next was the Sweet Baby Ray's barbecue sauce with no added sugar. Before this taste test, I was already familiar with Sweet Baby Ray's barbecue sauce. The brand has been cited as the top-selling barbecue sauce in the US, so this sauce had a lot to live up to, especially since it had no added sugar, which I worried would weaken the flavor. An 18.5-ounce bottle cost $4.89 at my local Key Food, making it the most expensive sauce I tried. The sauce had a balanced consistency. It wasn't too thick or too watery. I was really impressed by the flavor. It was sweet without being overpowering. Overall, this sauce nailed it for me. It was tangy but not sickly sweet, and it had a balanced consistency in terms of texture. I definitely got the smoky flavor without the overpowering molasses flavor I tasted in the KC Masterpiece barbecue sauce. It was also the lowest-calorie sauce of the ones I tried, with 15 calories per serving. However, when it came down to price, it was beaten out by the original version. My favorite barbecue sauce was Sweet Baby Ray's original barbecue sauce. It perhaps comes as no surprise that this sauce was my favorite. After all, the brand has won awards at various barbecue competitions for its sauce. An 18-ounce bottle cost $2 at my local Key Food after a markdown of $1.89, making it the least expensive barbecue sauce I tried. The sauce had a rich, red color and a similar consistency to the no-sugar-added version. It was just a touch less thick than the other sauce from Sweet Baby Ray's, but it still managed to coat the chicken nugget easily. In my opinion, this was the best sauce for dipping. Sweet Baby Ray's original barbecue sauce struck the perfect balance for me. The sauce had a slightly acidic, tart flavor that balanced out the sweet notes and an undercurrent of earthy flavor that made me feel like I was at a backyard barbecue. Next time I'm firing up the grill for some barbecue ribs or just need a dipping sauce for my nuggets or chicken tenders, I know exactly which barbecue sauce I'm grabbing.
