system
Given the following post, respond as if you're commenting on Reddit:
human
ELI5: Why are groceries more expensive in poorer neighborhoods?

I just moved from an apartment that borders a pretty wealthy area with high line and chain grocery stores.  I have shopped at these stores for years and have a pretty good mental note of how expensive items are.  
The house I moved into borders "the hood" and is in an older part of town.  After grocery shopping at two major grocery store chains here, I noticed everything is fucking 10-30% more expensive for the exact same stuff.  
In the rich neighborhood, there are huge amounts of specials, by one get one free, sale tags everywhere for lower prices on things.  Meats, dairy, produce, toiletries, kitchen disposables and so on are all way more expensive in the poor neighborhood.  
My theory is it's a fleecing of the EBT programs.   The population has a higher concentration of food stamps so stores jack prices and never put anything on sale because EBT users don't give a shit.  
Am I wrong? Why so much more expensive in an area where people have a whole lot less money than the neighborhood I moved from?   Pisses me off because I pay for my food and have to travel to a rich neighborhood to get better prices.
gpt
Let's look at what makes a rich neighborhood grocery store work (we'll use Safeway which is a large public grocery chain):

* *They are large.*  Their 2013 sales were $36.139 billion.  So volume is important.  
* *The stores are large* Their average store size is 47,500 square feet.  This is necessary to get the volume and keep inventory turns high.   
* *But their profit is slim.* Their 2013 operating profit was $635 million (1.8% of sales).  This tells us they don't have much wiggle room to absorb costs with the prices they charge.  
* Looking deeper, they have 1326 stores.  
* However they have 137,000 full and part time employees (103 per store).  Most stores are open 24 hours a day, which is 21 standard 8 hour shifts per week that must be covered.  If we presume all employees work in stores, all employees are full time, and all shifts are equally staffed that means of the store only has 24-25 people working on a shift!  
* Combining the employees with the square footage data, each person is responsible for about 1,800 square feet (including specialists like cashiers and butchers who are really only covering a fraction of that).
* Their 2013 inventory was $2.089 billion (or $1.575 million per store).  That means there's 1.5 million dollars worth of stuff sitting around not well watched.  

Combining the keys, a cheap grocery only works if they can have a huge store with a lot of inventory (to keep stocking fees from climbing), at low margin (to keep prices low), with few employees (low margin), and maintain controlled theft losses.  

They can't do that in the poor neighborhoods.  So prices become the thing that gives.