Why This Popular Grocer Is Gutting Its Store

Grocery Outlet has announced the closure of 36 underperforming stores across the United States, a decision driven by a period of aggressive overexpansion and significant financial losses. The Emeryville-based discount grocer reported a net loss of $225 million in fiscal 2025, marking a sharp reversal from the $39 million profit recorded in the prior year.

The closures represent approximately 6% of the company’s total store fleet. According to Jason Potter, President and CEO of Grocery Outlet, the company realized it expanded too quickly during a recent earnings call.

Financial Performance and Market Pressures

The decision to shutter locations follows a period of severe financial instability. For the fourth quarter, the discounter reported an operating loss of nearly $235 million and a net loss exceeding $218 million.

Company executives identified several factors contributing to the downturn. In November 2025, Grocery Outlet experienced a double-digit decrease in EBT sales, which executives attributed to a temporary lapse in SNAP funding. Following this, comparable-store sales decelerated in December 2025 and bottomed out in January 2026, according to CFO Chris Miller.

Regional Impact and Store Locations

The closures are heavily concentrated on the East Coast, where 24 of the 36 stores are located. These closures represent 30% of the company’s store count in that region, although Potter stated that the remaining 51 East Coast locations remain profitable.

In California, nine stores are expected to close. While the company did not initially release a full list, the advisory firm Gordon Brothers, which was hired to handle the leases, listed 36 stores as available for sublease. The California locations on that list include:

• Azusa
• Brawley
• El Cajon
• La Habra
• Ontario
• Poway
• Kerman
• Patterson
• Ridgecrest

Beyond California and the East Coast, the company is closing stores in Ohio, New Jersey, Maryland, Pennsylvania, and Idaho. Grocery Outlet has stated that it does not plan to fully exit any state.

Recovery Strategy and Future Outlook

To stabilize its financial footing, Grocery Outlet is implementing a series of operational changes. The company is leaning on a store remodeling program designed to provide locations with a standardized format. The grocer has introduced new C-suite hires and updated product ordering guides for its independent operators to improve overall performance.

Despite the current closures, the company maintains a growth strategy for the coming year. Grocery Outlet plans to open more than 30 new stores in 2026.

The company has not provided information regarding potential layoffs associated with the 36 store closures.