New York City's health department recently awarded a $75 million, six-year contract to an online grocery platform that has failed to pay more than $1 million owed to independent supermarkets across the five boroughs, and the company's CEO won't answer questions about it.
The platform, a San Diego-based company called Mercato, runs the city's Groceries to Go program, which lets low-income New Yorkers buy fresh fruits and vegetables at a 50 percent discount from local grocery stores. The city reimburses Mercato, and Mercato is supposed to pay the grocers, typically within 48 to 72 hours. But this year, those payments stopped coming. Dozens of independent store owners who stocked shelves, bagged produce, and fulfilled orders for city-subsidized customers have been left holding the bill.
Anthony Peña, president of the National Supermarket Association, which represents roughly 450 independent grocers in New York City, estimates his members are collectively owed more than $1 million. Some have not received a dime from Mercato since February.
Peña told the New York Post:
"We don't know why our members are not being paid."
And yet the city's Department of Health and Mental Hygiene went ahead and awarded Mercato a new contract worth $75 million over six years, according to public filings. The deal was slated to begin in July, just as the prior contract, under which Mercato received $30.4 million over four and a half years, expired on June 30.
Jorge Guillen owns two Cherry Valley Marketplace stores, one in Queens and one in the Bronx. Mercato owes his stores a combined $36,000. He said the financial strain forced him to find new financing and take on debt just to keep his shelves stocked and his bills paid.
"The impact on our business is huge. It affects my ability to purchase goods and pay my bills, so we had to find new financing. We took on debt."
Guillen said he had a Zoom call roughly a month ago with Mercato CEO Bobby Brannigan, who blamed the payment delays on the city itself, claiming the city had been slow to reimburse Mercato. The city's health department disputes that account, saying that based on a review of fiscal 2026 data, all invoices from Mercato have been paid on time.
So either Brannigan misled a grocer he owed tens of thousands of dollars, or the city's own records are incomplete. Neither answer inspires confidence in a $75 million handshake.
In Williamsburg, Brooklyn, Anthony Diaz manages a C-Town supermarket that participated in the program. He described chasing Mercato for money he was already owed:
"I had to hunt them down and basically beg them for $10,000, and they still owe me $4,500."
Diaz added that he had once been grateful to Mercato for helping independent stores survive when few other services existed for them. That goodwill has plainly run out.
Aris Duran, who owns several Key Food locations in New York City, was owed $45,000 at his store in College Point as of February. Mercato made small partial payments to chip away at the balance. But Duran did not receive the bulk of what he was owed until roughly two weeks ago, when he threatened to sue. Shortly after, Mercato sent a check for $23,000, described as paying him in full.
Duran has vowed not to work with Mercato again. And during the months when Mercato was not paying him for groceries his store delivered to city-subsidized customers, the company was still charging him a $99 monthly service fee.
That detail alone captures the arrangement: a vendor collects a monthly fee from a grocer, collects reimbursement from the city for produce the grocer already handed over, and then fails to pass the money along. The grocer absorbs the loss. The vendor bills him for the privilege.
The Mamdani administration's broader approach to grocery policy has already drawn sharp resistance from independent store owners. Immigrant grocers have sued the mayor over his $70 million plan to open government-run supermarkets in each borough, arguing the city would be directly competing with the small businesses it claims to support.
NYC Comptroller Mark Levine's office is currently holding up approval of Mercato's new $75 million contract. A spokesperson said the office has "outstanding questions" for the health department but declined to elaborate on what those questions are.
The Groceries to Go program itself has been paused since July 1 and is not enrolling new participants, according to the city's own program page. A health department spokesperson said the agency is "exploring our options so that these resources continue to reach New Yorkers in need."
The same spokesperson said the department was "unaware of delays in payments to supermarkets", a claim that is difficult to square with the National Supermarket Association's estimate that dozens of its members are collectively owed more than $1 million.
Peña connected the Mercato situation to the administration's larger grocery ambitions:
"But at the end of the day the city is not properly vetting a company that it is funding. It begs the question of what will happen with these public grocery stores."
That question carries weight. The Mamdani administration has faced repeated pushback over its grocery store initiatives. East Harlem immigrant shop owners have alleged that city sanitation fines spiked after they challenged the government-run supermarket plan in court, raising questions about whether City Hall retaliates against small businesses that push back.
Bobby Brannigan is a Brooklyn native who launched an online textbook company called ValloreBooks in college in 2001. The company grew to $100 million in sales before he sold it in 2012. He then invested in startups including Uber and Twilio. Mercato, now roughly ten years old, has operated in cities including San Francisco, Chicago, Denver, Philadelphia, Austin, and Washington, D.C.
Brannigan did not return multiple phone calls and emails from the Post seeking comment on the unpaid bills. His company's silence leaves the grocers, the city, and the public with no explanation beyond the disputed claim, relayed secondhand through Guillen, that the city was slow to reimburse.
Meanwhile, the city's own records tell a different story. The health department says every Mercato invoice has been paid on time. If that is true, then Mercato collected public money earmarked for grocers and sat on it, or spent it elsewhere, while the stores that actually did the work went unpaid for months.
The administration has also drawn scrutiny on other fronts. City officials have floated subsidizing the very grocers being undercut by the mayor's taxpayer-funded stores, an acknowledgment that the government's own grocery ventures are squeezing the private businesses they were supposed to help.
And this is not the only arena where the Mamdani administration's use of public resources has faced questions. An ethics complaint has accused the mayor of using city resources to boost Democratic candidates, part of a broader pattern of accountability concerns surrounding City Hall.
The numbers tell a clean story. Mercato received $30.4 million from the city over four and a half years. It owes independent grocers more than $1 million for produce those stores already delivered. The city's health department says it paid Mercato on time. And yet the administration recently awarded the same company a contract worth $75 million, more than double the total value of the prior arrangement, without, by the NSA's account, properly vetting whether Mercato was meeting its obligations to the stores that make the program work.
The program that was supposed to help low-income New Yorkers afford fresh produce has been paused since July 1. The grocers who filled orders in good faith are out tens of thousands of dollars each. The company that collected the city's money won't answer questions. And the administration that signed the checks wants to hand over $75 million more.
When the government can't even manage a middleman contract without stiffing the small businesses on the other end, the last thing anyone should trust it to do is run the grocery stores itself.
