When you walk into a deli in Manhattan or downtown Brooklyn, you see prices such as $3.99 for a gallon of Cream-O-Land nonorganic milk and $7.50 for a pack of American Spirits. These are ridiculously high, but are they making the deli owner rich? It costs $2.79 for me to buy that gallon of milk, which means my profit margin is a rather modest 40 percent. Cigarettes are worse—I buy them from a Palestinian guy on Smith Street who sells them out of the back of his deli for $6.40. The government makes most of the money.
There’s no overriding rule for setting prices. Here in downtown Brooklyn, the profit margins are said to be determined by block: 70 percent on fully gentrified Court Street, 60 on trendy but coarse Smith, 50 when you get down to Hoyt, where the projects are. (We generally charge 50 or 60 percent above cost.) Of course, some companies, such as Hostess and Frito-Lay, all but preclude the possibility of a profit by printing the price right on the wrapper, a practice known as “bellmarking.” This is why in America, no matter where you are, a small bag of Doritos always costs 75 cents, Big Red costs 30 cents, and Wonder bread costs $1.89. My question is, if everything else in New York costs more—gas, rent, property taxes—shouldn’t Doritos?
I am not a typical New York deli owner: I grew up in Boston and work as an editor at a literary magazine. My wife, who’s originally from South Korea, works for a Japanese bank in midtown. At night, we slice cold cuts and punch lottery tickets. A deli can hardly survive without the free labor of family members. My mother-in-law, a brassy, bighearted woman named Kay, takes care of most of the day-to-day management of the store, and it shows. Today, for instance, she’s wearing a faded orange T-shirt that says COSTA RICA (a place she’s never been) with the sleeves torn off, revealing arms far beefier than those of most 57-year-old women. Kay has worked in delis for twenty years, doing the typical immigrant superhero routine of twelve-hour shifts and six-day workweeks. She’s been attacked by a fellow employee and robbed at gunpoint.
Our store is a traditional deli grocery, about a mile from the Brooklyn Bridge. Two years ago, we bought it from a Palestinian-American who had decided, shortly after 9/11, to get out of the deli business. We were newly married and had boxed up our lives and stationed ourselves—temporarily—in Kay’s basement on Staten Island. From there, we started saving for a down payment and made it a base for our house-hunting. Then in some fit of madness, we decided to spend the savings on a deli instead. Today we live, as many immigrants do, in the same small house packed with extended family.
“In summer, sales of bottled water, God’s gift to deli owners, go through the roof. Unlike virtually anything else we sell, bottled water has a healthy proﬁt margin.”
There are things I love about the deli business. The close quarters force people to hang out and chat. I love looking at fully stocked shelves. I sleep well. I’ve learned that the trick is to count money just before you go to bed, even if it’s only a few hundred dollars. During the summer, sales of bottled water, God’s gift to deli owners, go through the roof. Unlike virtually anything else we sell, bottled water has a healthy profit margin—up to several hundred percent. Those $1 bottles of Poland Spring you buy? They cost us around 20 cents.
For all that I’ve learned to appreciate, however, a few weeks ago my wife and I agreed to put a for-sale ad in a Korean newspaper. Barely two years into this business, we are getting out.
The night shift begins at four in the afternoon, and on a weekday, this is usually a peaceful time. During the next nine hours, perhaps a few hundred customers will drift through our door. Over the long term, sales at a deli follow somewhat predictable patterns. People spend more in the middle of the month, between checks to the landlord. They stock up on groceries on Sunday night, and when the weather gets crappy, no matter what season it is, they gorge on ice cream. By contrast, the daily routine is volatile and deeply mysterious. Customers sometimes flood our store in groups of ten or fifteen. And then it’s empty for hours.
Another nice thing about the second shift is that health inspectors come by less often, so the cat, a phlegmatic tabby, can come out. (Cats, while practically universal in delis, are against code.) At night, the detectives trying to catch us selling cigarettes to minors tend to leave us alone as well. And the Drug Enforcement Agency hoping to catch us with bootleg cold medicine. And the Bureau of Alcohol, Tobacco, Firearms, and Explosives trying to catch us with “loosies,” cigarettes sold one at a time. It’s an endless list of operatives to watch for.
Under Bloomberg, delis have been fined for such absurd offenses as having too many letters on their awnings. True, inspections keep us honest, but as gossip in the Korean community suggests, the inevitable lapses and thunderous fines are driving large numbers of deli owners to abandon the profession. It’s certainly one of the reasons we are. Most deli owners are not rich, especially those who rent their business spaces. They stay open 24 hours, never taking a vacation, because they have to in order to generate a salary something in the neighborhood of what a schoolteacher makes. And what has happened to them in the past few years is that in addition to paying already enormous taxes to the city, state, and federal governments, they’ve had to absorb a kind of fourth tax—the inspector tax—which can come from any one of about seven agencies, but always does come, regardless of how clean or how careful you are.
The tyranny of the inspectors is all the more upsetting when you consider what the government fails to regulate. Consider ATMs. Like most delis, we have an ATM in our store that charges a fee of $1.75 per withdrawal. You would think that some accountability would be good, in case the machine eats your card or doesn’t give you the money. But our ATM has almost no identifying markings whatsoever. I don’t even know the full name of the guy who owns it. He’s just Mr. Kim, a Korean who owns a string of such machines all over Brooklyn. There’s no contract between us; he simply pays $800 to put his machine in our store. Occasionally he comes by to check on the machine and insert a fresh wad of cash.