The Big Gulps are coming, and the bodegas are going.
At New York City’s mini-grocery stores called bodegas, best known for their stocks of malt liquor and ATMS that charge you five bucks, all the talk is about the looming menace of 7-Eleven stores.
Remember when Pathmark, CVS and Starbucks destroyed the city by opening up stores here? It’s all happening again.
7-Eleven now runs more than 100 outlets in the five boroughs, with a dozen more coming this year. Even Manhattan, whose first 7-Eleven opened three years ago, is now home to about 20 of them, with 100 or so more coming in the next five years.
Locally owned businesses decry national chains stealing their customers. But they should look closer to home — at their locally owned government.
New York state offers the nation’s worst tax climate for small businesses, and the city makes the situation worse.
In the Bloomberg years, massive increases in cigarette taxes and anti-smoking laws have cut into one of the bodegas’ most reliable profit centers. The law banning big sodas has already gone into effect in bodegas — but it doesn’t affect 7-Eleven because as an operator of “convenience stores” rather than “bodegas,” the chain is regulated by the state, not the city. State law is so far silent on the issue of how large your soda should be.
Bodega owner Ramon Murphy, the president of the Bodega Association of the United States, pleaded with the state Senate in 2010 against a proposed soda tax, which for the moment has been dropped, saying beverages were 25% of his sales.
The bodega saga is a classic case of government giving you a back rub with one hand and punching you in the face with the other.
Oozing sympathy for small businesses (actually for large and powerful unions), the city has successfully kept Walmart out of the five boroughs.
Great. Except a bodega on Avenue D this year was hit with a $6,000 fine and made to undertake $37,500 worth of renovations after somebody noticed that the space was zoned for a garage — back in 1940. Current owner Bernard Margalit pointed out that the space had been operating as a store since the 1980s, to no avail.
Which is the greater threat? Walmart and 7-Eleven, or the nearly $900 million in fines and fees the city shakes down small businesses for annually?
On Grand Street in Brooklyn in 2010, a bodega was fined $40,000 in building-code violations because, on two advertisements it displayed promoting TV programs, the following words appeared in small print: “Free posters, while supplies last — Enter here to win great prizes.” Some sort of outdoor-advertising rule was broken. The bodega lawyered up and fought the fine in court for two years, then lost anyway.
In a fit of hysteria driven by media reporters about crazed teenagers on Four Loko, the senator from Brooklyn, Charles Schumer, two years ago rammed through an FDA regulation that banned alcoholic caffeine drinks. That killed another profit source in bodegaland, though the combination remains legal when you call it “Irish coffee.”
Bodegas’ longstanding black-market practice of selling single cigarettes as “loosies” — that’s right, it’s illegal to sell one C-stick but legal to sell 20 — will now earn you a city fine of as much as $1,000.
Stores like 7-Eleven enjoy cost savings and other economies of scale that make it possible for them to undersell local retailers. But government, while loudly proclaiming its love for the little guy, keeps coming up with more regulations that increase the advantages of being larger.
Who is going to be more able to survive this fine-apalooza — a deep-pocketed nationwide chain or mom and pop? Forty grand is nothing to 7-Eleven.
In a recent survey by the Bodega Association of New York City, 61% of owners said they faced a risk of going out of business soon and only 24% said they would advise others to start a small business in the city. Seventy-one percent said city officials didn’t understand how their business operates. Last year the owner of Eden Farm, a well-liked East Village bodega, reported he had endured his “worst summer ever” and predicted he’d soon go under.
And to all of this, the city responds with more and more ridiculous interference. Now it’s pushing the New York City Healthy Bodegas Initiative, a friendly-sounding document that gently tries to steer bodega owners to selling healthier fare. Today’s nudge has a way of becoming tomorrow’s law. Needless to say, this pressure isn’t being applied to state-regulated 7-Eleven.
Not that it’ll work anyway, even if 1% milk becomes something bodegas are required by law to sell. It’s been four years since Bloomberg ordered restaurants to post calorie counts. Did New Yorkers stop being fat?