The U.S. grocery and convenience retail sectors are facing a “perfect storm” of regulatory, economic, and behavioral shifts. The traditional Supplemental Nutrition Assistance Program (SNAP), which for decades operated under a unified federal standard, has fragmented into a patchwork of state-level restrictions under the “Make America Healthy Again” (MAHA) initiative.[1]
For retail operators, this transition represents a significant operational cost — estimated at $1.6 billion in upfront compliance — at a time when consumer behavior is already being reshaped by the proliferation of GLP-1 weight-loss medications. What follows below is our analysis of the intersection of these forces and a strategic roadmap for maintaining margins and consumer loyalty in this new environment.
The New Macroeconomic Reality: SNAP as a Regional Economic Lever
As of January 2026, 18 states have pursued waivers to restrict “junk food” purchases — including soda and candy — under SNAP. This shift coincides with persistent food-at-home inflation, making SNAP transaction efficiency a vital component of regional economic stability.
The impact of SNAP extends far beyond the individual household. Economists track the SNAP Multiplier,[2] which measures the total economic activity generated by every $1 spent in the program.
| Economic Metric | 2026 Forecast/Value | Strategic Implication |
| SNAP Multiplier Effect[3] | $1.54–$1.80 | Every $1 in benefits generates up to $1.80 in local activity through jobs, distribution, and retail services. |
| Food-at-Home Inflation[4] | +1.7% | Moderate inflation creates a “price ceiling” where retailers cannot easily absorb new compliance costs. |
| “Sugar and Sweets” Consumer Price Index (CPI) | +6.7% | High category inflation makes SNAP-eligible alternatives (bakery/fruit) more attractive for budget-conscious shoppers. |
| Aggregate Upfront Compliance | $1.6 illion[5] | Representing nearly 2% of total industry net income, this is a non-trivial capital expenditure. |
The “Leakage” Risk: Because SNAP benefits can be used across state lines, retailers in “restrictive” states that border “non-restrictive” states face Sales Leakage. A consumer in Indiana may drive to an adjacent state to avoid the friction of checkout-line “eligibility checks,” taking their entire grocery basket — not just the restricted items — with them.
The Operational Conundrum: A Taxonomy of Complexity
The absence of a standardized federal definition for “junk food” has forced retailers to manage state-specific product databases. This is not a simple binary filter; it is a granular, ingredient-level audit.
- The Flour Loophole: In states like Idaho, a chocolate bar is restricted, but a chocolate-covered cookie bar is eligible because it contains flour.
- The Carbonation Test: In Utah, a beverage’s eligibility hinges on a multi-factor decision tree involving carbonation levels and real fruit juice percentages.
Projected Monetary Impact by Retail Format
The $1.6 billion upfront cost is disproportionately distributed across formats, with convenience stores (c-stores) bearing the heaviest total burden due to their sheer volume and reliance on high-velocity, low-stock-keeping unit (SKU) transactions.[6]
| Retail Format | Upfront Cost (Agg.) | Ongoing Annual Cost | Monetary Impact Rationale |
| C-Stores | $1.0 Billion | $378.6 Million | High density of “restricted” SKUs (soda/candy) requires total SKU-level database overhauls. |
| Supermarkets | $305.1 Million | $281.4 Million | Ongoing costs are high due to labor-intensive “re-shelving” of items rejected at checkout. |
| Supercenters | $215.5 Million | $81.1 Million | High upfront costs for complex enterprise resource planning (ERP)/POS integration across multiple state jurisdictions. |
| Small/Rural Grocery | $11.8 Million | $18.0 Million | While lower in total dollars, these costs represent a higher percentage of net income, threatening rural food access. |
The Compounding Effect: GLP-1 Drugs and the ‘Snack Squeeze’
The SNAP restrictions are hitting the snack and beverage categories at the exact moment they are facing a structural decline due to GLP-1 weight-loss medications (e.g., Ozempic, Wegovy).[7]
- Behavioral Shift: Recent data shows that households using GLP-1 medications reduce overall grocery spending by 5.3% to 11%, with the sharpest declines in “indulgent” categories like salty snacks and sugary drinks — the very items now being restricted by SNAP.
- Category Overlap: The “overlap” between the GLP-1 consumer — looking for nutrient-dense, small-portion options — and the SNAP consumer — forced away from sugar-laden snacks — creates a massive volume headwind for traditional consumer packaged goods (CPG) snack brands.
- Retailer Frustration: 77.6% of GLP-1 shoppers report “abandoning” a snack purchase due to layout confusion or product overload. When combined with SNAP eligibility confusion, the “friction at the shelf” is at an all-time high.
Strategic Recommendations for Retail Executives
To navigate this “double squeeze” of regulation and behavioral change, we recommend the following actions:
- Pivot to “Functional” Snacks: Merchandising should shift away from “candy” toward “functional” treats that satisfy both SNAP eligibility and GLP-1 consumer needs (e.g., yogurt, protein-rich bars with flour, or pre-cut fresh fruit).
- Invest in “De-escalation” Training: Frontline labor is your biggest risk. Train cashiers not just on the technology, but on how to handle the “moment of rejection” at checkout to prevent customer churn.
- Leverage Private Label Reformulation: Private brands offer the agility to reformulate products — e.g., adding fiber or altering juice content — to ensure they fall on the “eligible” side of state decision trees.
- Automated Compliance: Do not rely on manual audits. Partner with third-party data providers to integrate real-time, state-specific eligibility flags into your POS and e-commerce platforms.
Conclusion
The transition to state-led SNAP restrictions is a significant operational burden, but it also provides a window to capture the “Health-Conscious Value” segment. By aligning merchandising with both the MAHA mandates and current consumer trends — such as the GLP-1 explosion — retailers can mitigate the $1.6 billion compliance hit and build a more resilient, future-proof food retail model.
Sources
[1] Is a Cookie a Type of Candy? Supermarkets Have a New Food-Stamp Conundrum,” Wall Street Journal, January 28, 2026
[2] Data re: regional economic impact of SNAP spending is sourced from the USDA and the Food Research & Action Center (FRAC)
[3] ibid
[4] USDA Economic Research Service (ERS)
[5] Prepared by Badger Metrics and released jointly by FMI – The Food Industry Association, the National Association of Convenience Stores (NACS), and the National Grocers Association (NGA) in October 2025.
[6] ibid
[7] Data on the reduction in snack and grocery spending among users of weight-loss medications is sourced from PwC, Euromonitor, and EY-Parthenon
© Copyright 2026. The views expressed herein are those of the author(s) and not necessarily the views of Ankura Consulting Group, LLC., its management, its subsidiaries, its affiliates, or its other professionals. Ankura is not a law firm and cannot provide legal advice.
