Key Food grocery to replace West Philly ShopRite, sparking more debate over impact of soda tax

A new grocery store is poised to replace the ShopRite that closed this week in West Philadelphia after its owner, Jeff Brown, blamed the city’s tax on sweetened beverages for a drop in sales.

The new tenants were expected to sign a lease Friday to open a Key Food store at the Haverford Avenue site in September and ensure that the Overbrook neighborhood has a grocery store, said Tilak Singh, one of the property’s owners.

“It can be used as a food store," Singh said Friday. "And why create a food desert when you don’t have to?”

Singh said the new operator, whom he declined to name because the lease was not finalized, runs three Key Food stores in New York.

The new tenants are “not concerned” about the tax on beverages, Singh said, but hope they can get a license to sell beer and wine that might offset reduced sweetened beverage sales.

“They’re coming from New York,” he said. “They’re used to paying high taxes.”

The announcement comes amid renewed debate over the controversial tax, which likely will be a major issue in this year’s mayoral and City Council elections. The 1.5-cent-per-ounce tax is expected to raise $76.6 million in the current fiscal year; it funds pre-K, community schools, and the Rebuild program to improve parks, recreation centers, and libraries.

While Brown has been a vocal critic of the beverage tax, Mayor Jim Kenney’s administration has suggested that the ShopRite owner made the tax a scapegoat for his store’s struggles and insisted that there is no evidence stores are hurt by the levy.

Singh said his new tenants are aware of the sales losses that Brown had experienced, because he shared some of his numbers with reporters. Brown said the store had been running at an annual net loss of more than $1 million, and he blamed a 23 percent drop in sales on the city’s tax on sweetened soda and other beverages.

“They think they can live within the parameters of the numbers that were disclosed publicly by Jeff," Singh said of the Key Food owners.

Kenney welcomed Signh’s announcement and said his administration will work with Key Food to help it serve the Overbrook neighborhood. Kenney spokesperson Deana Gamble said the store would be eligible for incentives offered to new businesses, such as tax credits for creating new jobs and programs that help with hiring and training employees.

“The fact that another business was ready, willing, and able to step right in to this Haverford Avenue location is evidence that grocers still have the ability to operate profitably in Philadelphia,” the mayor said in a statement.

Anthony Campisi, a spokesperson for Ax the Philly Bev Tax Coalition, said the announcement of Key Food’s plans “doesn’t change a thing,” and said ShopRite’s departure was still bad news, noting that Brown focuses on hiring ex-offenders to give them second chances.

“City businesses are hurting because shoppers are fleeing the city to the suburbs,” Campisi said.

Other obstacles remain for Kenney’s signature legislation as he seeks a second term. On Thursday, as Brown donated his unsold inventory to food pantries and closed the ShopRite, a group of Council members introduced legislation to amend and potentially eliminate the levy.

The bill, introduced by Councilwoman Maria Quiñones-Sánchez and six co-sponsors, would allow Council to change aspects of the tax beginning in 2020, such as the rate or which beverages are subject to it. Some Council members also introduced a resolution that calls for hiring a consultant to research the tax’s impact and look into alternative revenue sources for the programs it funds.

In one sign of how contentious the issue could become before the May primary, Kenney pushed back Thursday by criticizing the Council members who introduced the legislation.

“It’s a shame that people who [sponsored] that bill are putting the needs of the wishes of the beverage industry over the needs of our kids,” Kenney told reporters Thursday.

Brown, meanwhile, said he has two more stores that “lose a lot of money” since the tax took effect and said he fears he may have to close them. He said he is in discussions with the Key Food owners and hopes to sell them his old ShopRite equipment. He also noted differences between his stores and the new tenants, and continued to criticize the beverage tax.

“I run unionized operations, which is a much more costly, health-insurance scenario, and the whole package of retirement and all that,” he said. “And a little independent guy, you know, would not have the cost structure of my operation. However, I believe regardless of that, there is a huge risk that the beverage tax might make it difficult for anyone to operate.”

Singh said he is happy to bring in a new grocery tenant because community members urged him to do so.

“I’m trying to keep peace between the neighbors and the city and everything else," he said. "We could have brought easily Dollar Tree or a Dollar General ... but the community didn’t want that. They wanted a food store.”

Staff writer Julia Terruso contributed to this article.