Grocery Outlet to Close 36 Stores Amid Expansion Challenges

The bargain grocery chain cites missteps in rapid expansion as it focuses on refreshing existing stores and a more disciplined approach to new openings.

Published on Mar. 5, 2026

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Grocery Outlet, a California-based bargain grocery retailer, has announced plans to close 36 of its 570 stores, primarily in the eastern United States. The company's CEO, Jason Potter, who joined just over a year ago, cited the retailer's overly rapid expansion as the primary reason for the closures. Grocery Outlet's fourth-quarter results were "unacceptable," and the company has more work to do than expected, according to Potter.

Why it matters

The Grocery Outlet closures highlight the challenges of rapid expansion in the highly competitive grocery industry, where maintaining profitability and a consistent customer experience can be difficult. The company's decision to refocus on refreshing existing stores and a more disciplined approach to new openings suggests a shift in strategy to strengthen its core business.

The details

Grocery Outlet opened 42 new stores in 2025 and closed 5, ending the year with 570 stores across 16 states. However, the company has now decided to close 36 locations, 24 of which are in the eastern United States, representing about 30% of the region's stores. The closures are expected to improve the company's adjusted earnings before interest, taxes, and depreciation to around $12 million.

  • In 2025, Grocery Outlet opened 42 new stores and closed 5.
  • By the end of 2025, the company had 570 stores across 16 states.
  • In late September 2025, sales began to decline, partially due to marketing issues and changes in EBT (Electronic Benefits Transfer) distributions.
  • The sales decline continued into January 2026.
  • On March 4, 2026, Grocery Outlet announced the planned closure of 36 stores during an earnings call.

The players

Grocery Outlet

A California-based bargain grocery retailer with 570 stores across 16 states as of the end of 2025.

Jason Potter

The President and CEO of Grocery Outlet, who joined the company just over a year ago.

Christopher Miller

The Chief Financial Officer of Grocery Outlet.

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What they’re saying

“We are not fully exiting any state, and we believe we have a meaningful opportunity to grow in the east over the long term. However, it's clear now that we expanded too quickly, and these closures are a direct correction.”

— Jason Potter, President and CEO, Grocery Outlet (usatoday.com)

“Pressure on our core customer increased more than we'd expected. Basket pressure intensified, leading to a dip in sales that continued into January 2026.”

— Jason Potter, President and CEO, Grocery Outlet (usatoday.com)

“The 36 planned store closures will 'moderate revenue growth' and ultimately result in a 2% increase for the company's gross revenue.”

— Christopher Miller, Chief Financial Officer, Grocery Outlet (usatoday.com)

What’s next

Grocery Outlet plans to focus on its "model refresh rollout of 150 stores this year" and open another 30 to 33 new stores in 2026 under a more "disciplined approach" or "clustered model" to improve supply chain efficiency. The company will also invest roughly $20 million into promotions for fresh products to get customers excited.

The takeaway

Grocery Outlet's decision to close 36 stores, primarily in the eastern U.S., highlights the challenges of rapid expansion in the highly competitive grocery industry. The company's shift to a more disciplined approach to new openings and a focus on refreshing existing stores suggests a strategic pivot to strengthen its core business and better serve its customer base.