NYC politicians take aim at the new apps promising speedy grocery deliveries, saying they may violate a swath of city rules
The startups vying to transform how New Yorkers get their groceries have a problem: their delivery hubs might be illegal.
Companies like Buyk, Fridge No More, Gopuff, Gorillas, and Jokr hold their items in so-called “dark stores” before rushing them to customers. Inside, they have supermarket shelves but no cashiers, checkout lanes, or customers. Employees often cover the windows with construction paper or grates to block the public’s view.
Councilmember Gale Brewer and a group of allies are targeting these new additions to New York’s streetscape. She argues that these “dark stores” may violate a range of city regulations, from zoning restrictions to rules about keeping storefronts see-through for passersby.
“In most cases these stores do not comply with zoning or consumer affairs regulations, meaning customers are not allowed inside, windows are glazed or obstructed, and they do not accept cash transactions,” Brewer announced on Wednesday.
The delivery businesses are “gobbling up real estate and commercial corridors,” Brewer said, and now “threaten to displace our local mom-and-pop groceries and convenience stores.”
BetaNYC, a civic urbanism organization, released a map showing the locations and zoning status of 115 facilities maintained by the startups across the five boroughs. The map suggests that the “dark stores” are overwhelmingly located outside parts of the city where zoning allows warehouses.
In a letter sent to city agencies on Tuesday, City Council Speaker Adrienne Adams, Brewer, and others highlighted potential violations. They asked the city to investigate the stores and enforce any relevant regulations.
Several small business groups have backed Brewer’s push. Local convenience stores in particular have started to feel the squeeze from these app-based competitors.
Tuesday’s letter came a week after Councilmember Christopher Marte said he would introduce a bill to ban grocery startups from advertising their trademark pledge of 15 minute delivery. Marte said that benchmark pressured workers to take dangerous risks.
This intense scrutiny from local politicians is a new obstacle to these venture-capital-backed startups, which experts say have not had a smooth time entering the New York market.
As early as October, Wharton Professor Gad Allon, who tracks these startups, said that in New York, the companies had chosen “the worst market possible” for expansion.
Fierce competition for customers has already caused one New York-based startup, 1520, to shut down. Rumors have swirled that another, Jokr, might sell its operations as well. These setbacks come despite the companies netting billions of dollars in venture capital investment over the past few years.
Mark A. Cohen, the director of retail studies at Columbia University, thought New York’s high rents might doom “dark stores” even without city action.
“I’m sure that these spaces are not paying the kind of rent that would normally be the case for a retail enterprise,” Cohen said of the companies renting these delivery hubs. “I suspect that as the real estate market stabilizes, these fly-by-night outfits will be crowded out.”
In any case, politicians like Brewer seem determined to make the city less hospitable to these newcomers than it was to previous disruptions like Uber and Lyft.
“New York City chose to take the back seat to ridesharing apps and let medallion holders go underwater,” Brewer announced Wednesday. “We can’t let the same happen to immigrant- and locally-owned stores.”
(Map by BetaNYC)