Discount grocers have expanded aggressively in recent years as higher food prices pushed more shoppers toward lower-cost chains. Now Grocery Outlet is reversing part of that push, announcing a nationwide closure plan after saying some newer stores did not show a sustainable path to profit.
Grocery Outlet says 36 stores are set to close in 2026
Grocery Outlet Holding Corp. announced on March 4, 2026, that it would close 36 “financially underperforming” stores as part of a board-approved optimization plan, according to the company’s Form 8-K and earnings materials filed with investors. The company said the closures account for about 6% of its fleet, a significant retrenchment for a chain that has spent the past several years extending beyond its traditional stronghold in the West.
Chief executive Jason Potter said during the company’s earnings call that the company had completed a review of its store base and identified locations that did not have “a viable path to sustained profitability,” a conclusion later echoed in coverage by the Los Angeles Times and Grocery Dive. The closures were scheduled to be substantially completed during fiscal 2026, not all at once, and were paired with lease exits and operator agreement terminations for affected stores.
The financial backdrop was severe. Grocery Dive reported that the company posted a nearly $235 million operating loss and a net loss of more than $218 million in fourth-quarter results tied to the period ending January 3, 2026. Grocery Outlet also told investors that markdowns tied to store shutdowns could reduce fiscal 2026 gross profit by an additional $4 million to $6 million.
Eastern states are expected to feel the biggest effect
Grocery Outlet has confirmed the regional concentration of the cuts but has not published a comprehensive list of affected store addresses or cities. Company reporting and follow-up coverage said 24 of the 36 closures are in the eastern United States, representing roughly 30% of Grocery Outlet’s stores in that region.
Published reports have pointed to eastern states such as Pennsylvania, Ohio, New Jersey and Maryland as likely centers of the pullback, reflecting markets where Grocery Outlet had expanded more recently. Some secondary reports have circulated state-by-state estimates, but Grocery Outlet itself has not released a verified full breakdown by state or city, so those local counts remain unconfirmed unless separately announced.
What is confirmed is that the company is not exiting any state entirely. Newsweek, citing the retailer’s statement, reported that even with the closures, Grocery Outlet still plans to operate across its existing footprint. By the end of the first quarter, the company said it had completed the planned 36 closures in April and ended the period with 549 stores across 16 states after opening seven new locations and closing 28 during the quarter.
The company says overexpansion and weak newer markets drove the decision
The company has tied the closures directly to an overly aggressive growth strategy in newer territories. Potter said Grocery Outlet is taking a “tightened” approach to expansion going forward, with more selective real estate choices and stricter underwriting, after management determined some stores opened during the expansion push were not meeting long-term expectations.
Industry coverage has linked the decision to multiple pressures hitting discount grocers at once: inflation, rising operating costs, labor expenses, competitive pressure from chains including Aldi and Walmart, and supply chain complexity in less established markets. Grocery Dive also reported that the company has been leaning on store remodels, new leadership hires and new product-ordering guides for independent operators as part of its turnaround effort.
For shoppers, the immediate effect will depend on whether a local store is among the unlisted closure sites, something the company has not fully disclosed publicly. What Grocery Outlet has said is that the closures are part of a reset rather than a full retreat: it still expects net sales of $4.6 billion to $4.7 billion in fiscal 2026 and has said it plans to open 30 to 33 new stores in stronger-performing markets while focusing more heavily on profitability and execution.