Seven Save A Lot grocery stores on Chicago’s South and West sides shut their doors permanently over the weekend, delivering a hard lesson in what happens when city government tries to prop up a failing business model with public money.
The stores, backed by more than $13.5 million in city taxpayer funds, had been operated by a company called Yellow Banana under a redevelopment agreement meant to combat so-called food deserts. Despite the massive public investment, the venture collapsed anyway.
Yellow Banana’s broader deal with the city was worth roughly $26 million, with the remaining funding coming from federal grants and loans on top of the direct taxpayer financing. That is a staggering sum of public money for seven grocery stores that ultimately failed to survive two years.
The closures come just four years after Chicago announced the taxpayer financing package, and less than two years after the investment was actually made. Millions of dollars, in other words, bought the city a very short-lived experiment in government-subsidized grocery retail.
Save A Lot ultimately terminated its licensing agreement with Yellow Banana after the outlets faced serious financial headwinds, including a 26 percent drop in SNAP and EBT transactions along with other operational pressures. The private company essentially decided the math no longer worked, taxpayer subsidies or not.
City officials, naturally, have pointed fingers elsewhere. Chicago Mayor Brandon Johnson blamed federal cuts to SNAP benefits for the closures, a familiar deflection from an administration that spent tens of millions of dollars trying to keep a failing operator afloat.
“You know what’s happening at the federal level? That’s what’s causing the disruption of the local market,” Johnson said, seemingly unwilling to acknowledge that government intervention in grocery retail carries its own inherent risks, regardless of federal policy.
Yellow Banana had struggled from the start, with missed deadlines, protests, legal disputes, sudden closures, and scathing national headlines dogging the company’s efforts to reopen the stores in the first place. This was not a smooth rollout that hit an unexpected snag. It was troubled from day one.
The company also suffered a significant blow in April when its CEO, Joe Canfield, died of a stroke at 54, further destabilizing an already shaky operation. Even setting aside broader questions of government-subsidized retail, the operator was clearly not built to last.
Theft was also a likely contributing factor in the closures, a persistent challenge for retailers operating in high-crime areas of the city, though public emphasis fell more on broader financial pressures than security concerns.
For residents, the consequences are immediate and personal. One Chicago resident said she now has to travel much farther for groceries, a particular hardship for elderly neighbors who relied on the nearby location for convenience.
Another resident described the closures as leaving the community without hope, lamenting that resources keep getting taken from neighborhoods that already have little to spare.
Locations that received TIF funding must be reoccupied by a grocer within a year or risk defaulting on that funding arrangement, adding another layer of financial pressure to an already messy situation.
This is hardly a novel story. Government efforts to artificially sustain unprofitable retail operations have a long track record of failure, from Soviet-era bread lines to modern American attempts at municipal grocery stores.
National commentators have not been shy about drawing that comparison, warning that Chicago officials should have studied how government-run grocery stores fared in the old Soviet Union before pouring millions into this experiment, and that the city should brace itself for bread lines.
The timing is particularly awkward for progressive politicians nationally who have floated similar ideas. Seattle’s mayor has pushed the concept of government-run or government-backed grocery stores in her own city, arguing that food deserts are manufactured by corporations abandoning communities.
Chicago’s experience suggests otherwise. Government-backed stores inherit all the same cost pressures as private retailers, labor, energy, supply chains, and security, while adding political interference and removing the profit motive that drives efficiency and innovation in the first place.
The result in Chicago was predictable to anyone who has watched government attempt to replace market forces before: millions of taxpayer dollars spent, temporary relief for residents, and ultimately the same empty storefronts the subsidies were meant to prevent.
