A well-known discount grocery chain is pulling the plug on more than 30 of its stores after a tough financial run and a hard look at how quickly it tried to grow. Grocery Outlet Bargain Market says it’s not just about the pace—it’s also about shoppers on food assistance spending less these days.
By the end of its current fiscal year, the company expects to close 36 stores across the country, says the Independent. Leaders say these closures are a mix of cost-cutting and admitting that their rapid push into new markets just didn’t pan out like they hoped.
Grocery Outlet has always thrived on surprise bargains. Their shelves stock surplus food and closeout deals. Shoppers love the variety of leftovers from big brands, discontinued products, and stuff other stores never sold. You might pop in for milk and walk out with a cart loaded with random discounts.
Thing is, that whole set-up relies on shoppers who watch every penny. But lately, that’s gotten a lot tougher. And the market is feeling it.
The grocery chain that operates in 16 states said it will close dozens of underperforming stores. https://t.co/et5yxbGYR5
— 10TV (@10TV) March 6, 2026
President and CEO Jason Potter told investors the company simply moved too fast, especially in the eastern states. Last year, Grocery Outlet opened new stores. This brought the total to around 570 across 16 states.
On paper, that growth looks great. In real life, it is not so easy.
Twenty-four of the closing stores are in the eastern U.S., where demand just couldn’t keep up with all those grand openings. These locations make up about six percent of the company’s stores.
Potter laid out the plan during a March earnings call, right after the company reported a disappointing fourth quarter. They had a net loss of more than $218 million, even though total sales kept climbing.
But that’s the very nature of grocery business. Sales can go up while profit slips away, since margins are razor thin. Most supermarkets earn just a penny or two for every dollar customers spend.
So even a small drop in spending hurts, fast.
Potter said things got harder for the company’s core customers near the end of last year. Many of them rely on SNAP—the Supplemental Nutrition Assistance Program. These food stamp sales made all the difference to their bottom line.
Grocery Outlet, a California-based grocery store chain with hundreds of locations in the U.S., is preparing to close 36 locations as part of an "optimization and restructuring plan." What we know: https://t.co/XV19x1Z0mE pic.twitter.com/Ox6WFTKgIb
— KTLA (@KTLA) March 5, 2026
When those benefits arrive late or shrink, shopping habits change. In late 2025, during the government shutdown, Electronic Benefits Transfer payments slowed down. SNAP customers started spending less. The shift showed in the sales numbers. There were fewer items in each cart, and sometimes entire trips skipped.
About 42 million people across the U.S. use SNAP. For many neighborhood grocers, those sales are a huge chunk of business. In some smaller stores, SNAP spending can drive more than half the sales.
Grocery Outlet sits right in the middle of all that. Its shelves shift from organic yogurt one week to frozen pizza the next, depending on what deals come in. The ever-changing bargains are the whole appeal to the buyer.
Potter insists the company isn’t done growing. They still plan to open between 30 and 33 new stores in fiscal 2026. But now the strategy is shifting.
New stores will be closer together to make supply and delivery smoother. The company also plans to spend about $20 million on promotions. They also realized that they need to keep updating older stores with a refresh program.
Underperforming stores will start closing over the next few months. For shoppers who chase unexpected deals, they now have one less stop to make come pay day.
