Mayor Zohran Mamdani's administration awarded a massive new contract to an online grocery company that has stiffed dozens of independent New York City supermarkets on payments, and the city claims it had no idea.

The city's Department of Health and Mental Hygiene recently gave Mercato, a San Diego-based online grocery platform, a six-year, $75 million contract to run the publicly funded "Groceries to Go" program, even as the company owes more than $1 million to independent grocers across the five boroughs for produce delivered months ago, the New York Post reported. The National Supermarket Association, which represents roughly 450 independent grocery stores in the city, says dozens of its members have been waiting on checks from Mercato since as far back as February.

The program, which lets eligible low-income New Yorkers buy fresh fruits and vegetables at a 50 percent discount from neighborhood grocery stores, has been paused since July 1. Mercato's prior contract, worth $30.4 million over four and a half years, expired June 30. The new deal was supposed to start in July, but the city comptroller's office is holding it up, citing "outstanding questions" for the health department. A spokesperson for Comptroller Mark Levine declined to say what those questions are.

The health department, for its part, told the Post it is "unaware of delays in payments to supermarkets" and that "all invoices from Mercato have been paid on time" based on a review of its fiscal 2026 data. That claim sits uneasily beside the accounts of store owners who say Mercato has gone dark on them for months.

Store owners say Mercato left them begging for their own money

Anthony Diaz manages a C-Town supermarket in the Williamsburg section of Brooklyn. He said Mercato owed his store $10,000. He recovered part of it, but only after chasing the company down.

"I had to hunt them down and basically beg them for $10,000, and they still owe me $4,500."

Diaz added that he once valued the relationship. "I was grateful to them in the beginning," he said. "They helped me to survive when there were very few services for the independents."

Jorge Guillen, who owns two Cherry Valley Marketplace locations in Queens and the Bronx, told the Post that Mercato owes him a combined $36,000. Guillen said the financial hit forced him to take on new 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 Mercato normally deposited payments within 48 to 72 hours of a grocery delivery. That stopped this year. "Now Mercato has not paid some NSA members since February," he said.

Roughly a month before the Post's report, Guillen said he got on a Zoom call with Mercato CEO Bobby Brannigan. Brannigan's explanation, according to Guillen: the city had been delaying reimbursements to Mercato. The health department's own statement directly contradicts that claim.

One grocer got paid only after threatening a lawsuit

Aris Duran, who owns several Key Food stores in New York City, was owed $45,000 at his College Point location back in February. Mercato sent small partial payments over the following months. About two weeks before the Post's report, Duran threatened to sue. A check for $23,000, covering the remaining balance, arrived shortly after.

Duran said he will not work with Mercato again. He also pointed to a detail that captures the relationship's imbalance: Mercato charged him a $99 monthly service fee even during the months it was not paying him for groceries his store had already delivered to customers.

The pattern across these accounts is consistent. Mercato collected city money, promised grocers fast payment, then stopped paying, while continuing to collect fees. The grocers, many of them small family-run operations, absorbed the losses or went into debt. The city says it paid Mercato on time. Mercato's CEO told at least one grocer the opposite. And Mercato itself did not return multiple phone calls and emails from the Post seeking comment.

Mamdani's grocery ambitions keep running into the same problem

The Mercato mess is not the only grocery-related headache for the Mamdani administration. The mayor has separately proposed a $70 million plan to open government-run supermarkets in each borough, an idea the National Supermarket Association opposes as unfair, taxpayer-funded competition against the independent stores already serving those neighborhoods. The administration's track record of policy rollouts meeting resistance from courts and oversight bodies has become a recurring theme.

NSA President Anthony Peña drew a direct line between the two issues. "We don't know why our members are not being paid," he told the Post. He then turned to the broader question of competence.

"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."

It is a fair question. If the city cannot manage oversight of a single vendor contract, one where the vendor stopped paying the stores doing the actual work, the prospect of City Hall running its own supermarkets looks less like ambition and more like a recipe for waste. Mamdani's administration has faced repeated questions about its management of basic government functions.

Brannigan built Mercato on hustle, now the company won't return calls

Mercato's founder, Bobby Brannigan, is a Brooklyn native who launched an online textbook company called ValloreBooks while still in college in 2001. That business grew to $100 million in sales before he sold it in 2012. He went on to invest in startups including Uber and Twilio, then founded Mercato. He moved the company's headquarters from New York to San Diego in 2019.

The 10-year-old company has also operated in San Francisco, Chicago, Denver, Philadelphia, Austin, and Washington, D.C. It became a New York City vendor in 2023. Over the next four and a half years, it collected $30.4 million in public funds through the Groceries to Go program. Now, with a contract worth more than double that amount on the table, the company will not answer questions about why it is not paying the stores that made the program work.

The health department said it is "exploring our options so that these resources continue to reach New Yorkers in need." The program's own city webpage states it "has been paused and is not enrolling new participants at this time." The department did not explain how it reconciles its claim that all invoices were paid on time with the grocers' accounts of months-long non-payment. Meanwhile, the Mamdani administration faces scrutiny on multiple policy fronts, and the comptroller's office has yet to clear the new contract.

Grocers paid the price for a program that was supposed to help their communities

The Groceries to Go program was designed to put affordable produce in the hands of low-income New Yorkers by partnering with the neighborhood stores they already shop at. On paper, it was a straightforward arrangement: the city subsidized the discount, Mercato handled the online platform, and local grocers delivered the food. The grocers were supposed to get paid within days.

Instead, the stores that served their communities became Mercato's unsecured creditors. They delivered the groceries. They waited for checks that did not come. Some went into debt. One got paid only after hiring a lawyer. And the city agency responsible for the contract says it knew nothing about any of it.

The administration's handling of the Mercato contract fits a broader pattern. Whether it is questions about the mayor's public responses to crises or ambitious spending plans that outpace the bureaucracy's ability to execute them, the gap between announcement and accountability keeps widening under Mamdani's City Hall.

When a city hands $30 million in public funds to a company, then lines up $75 million more, and then claims it had no idea that company was stiffing the small businesses doing the actual work, that is not a vendor problem. That is a government problem.