As the ShopRite grocery store in Overbrook is slated to close this week after three decades in business, owner Jeff Brown says it might not be the last of his stores to shut its doors due to the city’s sweetened beverage tax.
The tax, he said, ate into a quarter of the store’s revenues since it was put in place at the start of 2017.
But Brown now is putting the city on notice: Two more of his Philadelphia supermarkets are at risk of closing due to lost revenues as a result of the sweetened beverage tax. He called for a repeal of the tax.
“I have two stores that are losing a substantial amount of money,” Brown said. “There’s term left on their leases, but they’re not financially viable in their current state with this beverage tax.”
Brown declined to identify the stores or how much revenue they were losing. He owns six ShopRite stores and a single Fresh Grocer in Philadelphia.
Mike Dunn, a Kenney spokesman, said in an email that the administration needed more details, including the locations of the stores, in order to respond to Brown’s claims.
Nonetheless, Dunn said Brown and other grocery store owners continue to scapegoat the sweetened beverage tax.
“Neither he [Brown] nor the beverage industry have yet to present any evidence that the tax has had any impact on sales,” Dunn said. “We said that when he announced the closure of the Haverford store in early January, and two months later we’re still waiting for such evidence.”
Dunn hinted that the Overbrook building might soon have a new tenant. The administration was working with the owner to bring a new grocery store to the site, he added.
“Conversely, the fact that another businessperson is ready, willing and able to step right in to that Haverford Ave. location is evidence enough that the beverage tax does not impact the ability of grocers to operate profitably in Philadelphia,” Dunn said.
Kenney maintains that the tax is helping Philadelphians, particularly children of color.
During a meeting last week with The Philadelphia Tribune editorial board, Kenney said children of color have been consuming less sweetened beverages than before the tax.
“And that’s a good thing because obesity in neighborhoods of color is a rampant problem,” the mayor said. “So if kids are drinking less sweetened beverages their whole life, they’ll be a much happier, healthier group of people.”
The 1.5-cents-per-ounce tax is levied on the businesses and distributors of sweetened beverages intended for retail sale in the city, so customers are not responsible for paying the tax.
Nonetheless, a study found that stores were typically passing the full price along to consumers.
Funds from the soda tax go toward Kenney’s $500 million plan to offer universal pre-kindergarten, pay for Community Schools, and renovate parks, libraries and other public spaces. These programs would disappear without the tax, Kenney has said.
Since the tax took effect, the administration has said wage tax revenues in the sectors most affected by the tax have been strong, unemployment claims in those sectors have been down, and several grocery stores have opened.
“We have seen a number of new grocers enter the market, and it is important to note that the Brown’s ShopRite situation does not seem to indicate a trend,” Dunn said.
“And it is unlikely that the viability of one product line should be so damaging to a grocery store with a wide variety of products.”
A Giant Heirloom Market opened in January in the gentrifying Graduate Hospital neighborhood on the ground level of a four-story luxury condominium building at 2303 Bainbridge Ave. Wawa also opened a new store — its largest ever — in Center City near Independence Hall in December.
“We do not believe the [soda tax] legislation will have a negative impact on our business,” said Ashley Flower, a spokeswoman for Giant, in an email.
But Brown said the soda tax was not affecting the bottom lines of supermarkets in more affluent communities. Instead, grocery stores in low-income neighborhoods bear the burden.
“This is not a problem with rich folks. They’re fine,” Brown said. “This is a problem with underprivileged communities. We all consume sugar, but their beverage of choice is … taxable.”
Brown said he will close the store at 67th Street and Haverford Avenue at 11 a.m. Thursday. He will donate any remaining food to local food pantries. The 109 employees will keep their jobs by transferring to his nearby stores.
Brown said he plans to vacate the 41,300-square foot building by March 31.
The West Philadelphia building is listed for lease on Metro Commercial Brokers’ website. The leasing price is negotiable, the website says. Metro Commercial Brokers did not respond to requests for comment on Monday.
The closure of the store comes weeks before the May primary, in which Kenney faces at least one Democratic challenger and the soda tax is becoming a major campaign issue.