NYC Mayor Zohran Mamdani’s administration is moving toward awarding a $75 million contract to online grocery platform Mercato even as dozens of independent New York City supermarkets say the company has failed to pay them more than $1 million for groceries delivered to customers months ago, the NY Post reports.
San Diego-based Mercato operates an online marketplace that allows qualifying New Yorkers to purchase fresh fruits and vegetables from neighborhood supermarkets at a 50% discount through the city’s “Groceries to Go” initiative. City records show the company has received $30.4 million through the program over the past four and a half years.
Store owners, however, say Mercato has fallen far behind on payments this year, leaving independent C-Town, Bravo, Key Food and other supermarkets collectively waiting for more than $1 million for food they already supplied to customers.
“I had to hunt them down and basically beg them for $10,000 — and they still owe me $4,500,” said Anthony Diaz, who manages a C-Town in Williamsburg, Brooklyn.
Jorge Guillen, who operates two Cherry Valley Marketplace locations in Queens and the Bronx, said Mercato owes his stores approximately $36,000.
“The impact on our business is huge,” Guillen told The Post. “It affects my ability to purchase goods and pay my bills, so we had to find new financing. We took on debt.”
Despite the complaints, the city Department of Health and Mental Hygiene recently awarded Mercato a new six-year contract worth $75 million, according to public filings. The agreement had been scheduled to take effect in July.
A health department spokesperson told The Post that the agency is “unaware of delays in payments to supermarkets.”
The agreement has not yet received final approval from the city Comptroller’s Office. A spokesperson for Comptroller Mark Levine said the office has “outstanding questions” for the Department of Health and Mental Hygiene concerning the contract.
The spokesperson declined to disclose what questions the comptroller’s office has raised.
Mercato has been doing business with the city since 2023. Its previous $30.4 million contract expired June 30, and the city currently states on its website that the Groceries to Go program “has been paused and is not enrolling new participants at this time.”
Guillen said he participated in a Zoom meeting roughly a month ago with Mercato CEO Bobby Brannigan. According to Guillen, Brannigan attributed the company’s payment problems to delays in reimbursements from the city.
“Usually Mercato deposits the funds in 48 to 72 hours,” Guillen told The Post. “Now Mercato has not paid some NSA members since February.”
The city disputes the suggestion that its own payments are responsible for the problem. A health department spokesperson said a review of fiscal 2026 records showed that all invoices submitted by Mercato were paid on schedule.
“We don’t know why our members are not being paid,” said Anthony Peña, president of the National Supermarket Association, which represents approximately 450 independent New York City grocers.
“But at the end of the day the city is not properly vetting a company that it is funding,” Peña added. “It begs the question of what will happen with these public grocery stores.”
Peña was referring to Mamdani’s separate $70 million proposal to establish a government-operated supermarket in each of New York City’s five boroughs. The NSA and other groups representing local grocers have opposed that initiative, arguing that taxpayer-backed stores would create unfair competition for independent supermarkets already struggling to stay afloat.
Mercato operates beyond New York and has offered its services in major markets including San Francisco, Chicago, Denver, Philadelphia, Austin and Washington, D.C. The company did not respond to multiple calls and emails from The Post requesting comment.
According to Peña, dozens of NSA members are owed a combined total exceeding $1 million, with some stores waiting months to receive their money. He said the problems emerged this year; previously, Mercato generally paid supermarkets anywhere from several days after a delivery to a couple of weeks later.
Several independent grocers said their relationship with Mercato had once been highly beneficial. The decade-old company, which relocated its headquarters from New York to San Diego in 2019, helped bring neighborhood supermarkets into the online-shopping business, particularly during the COVID-19 pandemic.
“I was grateful to them in the beginning,” said Diaz of Williamsburg, “They helped me to survive when there were very few services for the independents.”
Brannigan, a Brooklyn native, told the San Diego Tribune in 2019 that he began an online textbook business called ValloreBooks while in college in 2001. The company eventually reached $100 million in sales before he sold it in 2012. He subsequently invested in startups including Uber and Twilio, according to the report.
Another grocer, Aris Duran, who owns several Key Food locations across New York City, said his College Point store was owed $45,000 by Mercato in February. The company gradually made small payments toward the outstanding balance, but Duran said he eventually became frustrated and threatened legal action two weeks ago.
Duran said Mercato then suddenly sent him a $23,000 check that cleared the remaining debt. Nevertheless, he said he has no intention of doing business with Mercato again, particularly because the company continued charging him a $99 monthly service fee during the period when it was failing to pay for groceries supplied to customers.
Meanwhile, the Department of Health says it is still considering how the subsidized grocery initiative should be restarted after the program was suspended July 1.
“Groceries to Go provides eligible New Yorkers with critical access to affordable groceries online and for pickup or delivery. As prices of groceries increase, the importance of programs like this one have grown in need too. While the program has been temporarily paused, we are exploring our options so that these resources continue to reach New Yorkers in need.”
{Matzav.com}
