The grocery discount store “Grocery Outlet,” headquartered in the San Francisco Bay Area of California, recently announced its plan to close 36 underperforming stores within a year, with 24 of them located in the eastern United States.
According to Jason Potter, the CEO of the company, during a quarterly financial meeting on Wednesday, the 36 stores were unable to sustain profitability. He stated, “Our performance in the fourth quarter of last year was unacceptable, and the outlook for 2026 reflects more areas for improvement than expected.”
In the fourth quarter of last year, the company reported an operating loss of nearly $235 million and a net loss exceeding $218 million. Some of the contributing factors include consumer spending pressure, intensified market competition, and the disruption of government assistance program SNAP (Supplemental Nutrition Assistance Program) funding during the federal government shutdown last year.
Although the company’s basic pricing of goods remains competitive, Potter noted a decline in customers’ “perception of value.” He mentioned, “Customers come to Grocery Outlet expecting high-quality goods at bargain prices and a treasure hunt-like shopping experience, but the quantity of items purchased per shopping trip has decreased because we have not provided enough super value deals and a wide range of products, which are key factors in increasing shopping amounts.”
The planned closure of stores was identified in a strategic evaluation in the first quarter, including a discontinued distribution center. The company has hired asset consulting firm Gordon Brothers to sell its retail stores in California, Idaho, Pennsylvania, New Jersey, Maryland, and Ohio, as well as furniture and equipment.
“It’s clear now that we expanded too quickly, and closing these stores is a direct correction to the pace of expansion,” Potter stated. The company will also undergo a strategic evaluation of the United Grocery Outlet chain, acquired in April 2024, which has 40 stores. “Currently, I am not sure of the final outcome… from comprehensive integration to potential sale, there are various possibilities.”
Currently, Grocery Outlet has a total of 570 stores in 16 states across the United States. In 2025, the company opened 42 new stores and closed 5. Despite planning to close 36 stores in 2026, the company is preparing to open 30 to 33 new stores. These new stores have undergone stringent review and network analysis.
“We plan to expand in a more centralized manner to enhance supply chain efficiency and marketing advantages,” Potter said. The company is adjusting its product mix, and by restoring customers’ experience and perception of value for goods, sales growth will be promoted.
Founded by James Read on June 11, 1946, as Cannery Sales, the company was renamed Grocery Outlet in 1987 and primarily deals in bakery products, dairy, deli, frozen foods, meats, produce, snacks, beer and wine, and groceries. It was acquired by Berkshire Partners in 2009 and Hellman Friedman LLC in 2014, before going public in 2019, with the stock symbol “GO.”
Grocery Outlet is not the only grocery company planning to close stores. In late January of this year, Amazon announced the closure of all Amazon Fresh and Amazon Go stores nationwide, with some stores being converted into Whole Foods Market supermarkets. In June of last year, Kroger announced the closure of 60 stores over the next 18 months, including various food retail stores under brands such as Ralphs, Kroger, and Food 4 Less.