Grocery Outlet To Close 36 Stores Amid Expansion Challenges

The discount grocer plans to shutter underperforming locations while still opening 30-33 new stores in 2026.

Published on Mar. 8, 2026

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Grocery Outlet, a California-based discount grocery chain, has announced plans to close 36 underperforming stores in 2026 as part of a business optimization strategy. The company said it expanded too quickly and is now facing financial challenges, including a net loss of $218 million in Q4 2025 and a 43% drop in share price over the past year. Despite the closures, Grocery Outlet still plans to open 30-33 new stores in 2026.

Why it matters

Grocery Outlet's store closures highlight the challenges facing discount retailers as they navigate increased competition, consumer pressure, and changes in government assistance programs. The company's decision to shutter underperforming locations while continuing expansion reflects its efforts to strengthen long-term profitability and cash flow.

The details

Grocery Outlet said the optimization plan includes closing 36 underperforming stores, ending or subleasing related store leases, and terminating or subleasing a distribution center. The company currently operates more than 560 stores across 16 states and ended 2025 with 570 stores after opening 7 new locations in Q4. CEO Jason Potter acknowledged the company expanded too quickly and said 24 of the 36 closures will be in the eastern U.S., though Grocery Outlet is not exiting any state.

  • Grocery Outlet reported a net loss of $218 million in the fourth quarter of 2025.
  • Grocery Outlet's share price has fallen more than 43% over the past year.

The players

Grocery Outlet

A California-based discount grocery chain that operates more than 560 stores across 16 states.

Jason Potter

The Chief Executive Officer of Grocery Outlet.

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What they’re saying

“Following a rigorous analysis of the fleet, we identified 36 stores in the network that we concluded did not have a viable path to sustained profitability. It's clear now that we expanded too quickly, and these closures are a direct correction.”

— Jason Potter, Chief Executive Officer (The LA Times)

“Consumer pressure intensified, federally funded benefits were delayed, and competition grew more promotional in the fourth quarter. In response, we have begun to sharpen our focus on what matters most: delivering clearer value and a better in-store experience.”

— Jason Potter, Chief Executive Officer (Grocery Outlet)

What’s next

Grocery Outlet plans to complete the 36 store closures and related lease terminations or subleases over the course of 2026 as part of its business optimization strategy.

The takeaway

Grocery Outlet's decision to close underperforming stores while continuing expansion reflects the challenges facing discount retailers in a competitive market. The company's efforts to optimize its business and focus on delivering value and a better in-store experience will be crucial as it navigates changing consumer and economic conditions.