First off, the headline on this post does not match the current one on the article.. The current headline on the article is:

Mayor Mamdani Unveils 30% Discount — Including All Produce, All Meat and Key Pantry Staples — at New Municipal Grocery Stores

So the discount is not on everything. It's basically on healthy foods and staples. I would assume that the margins on the rest of the items will be set to cover the costs of the discounted ones. Also, a store like this is not supposed to be a profit center.

It's supposed to make healthy foods available to people who struggle to afford it. If the store breaks even after rent, utilities, and payroll, then I would call it a glorious success.

Likely the same reason "Chinese groceries" are so cheap...

The absolute vast majority of Americans get their food from the same handful of corporations that all have insanely high markups at every step of their vertical integration to obfuscate profits.

The "Chinese groceries" have built up their own infrastructure that buys from small farmers all over the nation and transporta fresh produce more effectively than corporations. Because corporations just prioritize shelf stability and looks over flavor and nutrition.

Now, to be fair this is also true to a lesser extent for Hispanic and other "ethnic groceries" as well, but more often than not they're plugged into the Chinese infrastructure as well, especially for produce that isn't in season locally. It's really the only option a small restaurant has to make it these days.

Which means they're the safest to eat at during widespread outbreaks like were seeing now. Because all the chains use the same giant suppliers.

Probably less profit