This Popular Discount Grocer Is Shutting Down Dozens Of Stores

Affording groceries is already hard enough these days, and now a nationwide discount grocery that really helps people save is set to close three dozen stores. The company doing the shuttering is Grocery Outlet, a chain of grocery stores that, at least before these upcoming closings, had 570 locations across 16 states. Based out of California, Grocery Outlet is known for its unique budget model of independently-owned grocery stores, which keep prices low by purchasing overstock and closeout deals from other retailers and major brands. Quite literally applying the outlet mall model to food. However, despite the high demand for budget groceries, it appears Grocery Outlet may have been too ambitious in recent years.

Up until this announcement, Grocery Outlet had been expanding quite rapidly. Those 570 stores were up from around 300 stores in 2019, and it had opened 42 locations last year. But during the most recent company earnings call, it was revealed that the company experienced a $218 million net loss in the fourth quarter of 2025, despite an 11% increase in sales. On the earnings call, Grocery Outlet's President and CEO Jason Potter directly attributed the losses to overexpansion and said the closure of the 36 stores is a response to that concern. While some underperforming stores in California, Idaho, and Ohio will be closing, 24 of the closures will be on the East Coast. However, Potter says the company has no plans to fully exit any market the chain is currently in.

While the CEO attributed recent woes to overexpansion and a failure to deliver the deals Grocery Outlet is known for, there is another big force weighing on the company's business model. Last year, funding for SNAP programs, which provide food assistance to low-income, elderly, and disabled Americans, was cut by 20%. It is estimated that up to four million people could lose all or some of their food benefits due to the cuts. In addition to that, SNAP payments were temporarily frozen by the administration last year and have only been haltingly restarted, with some people not receiving their full normal payments. Being a discount retailer, Grocery Outlet is highly appealing to people on a tight food budget, and the chain reported double-digit declines in EBT sales last quarter, which are linked to the SNAP benefit cuts. The company also says increasing financial pressure on its core customers has led to declining traffic and fewer items being purchased per trip.

However, Grocery Outlet is only seeing this as a temporary setback. The company is currently in the process of reorganizing its stores to increase standardization, and despite the recent closures, it revealed it is still planning to remodel more than 150 stores and open between 30 and 33 new locations in 2026. So while some local communities won't have access to Grocery Outlet's ultra-discounted food anymore, there will hopefully be locations opening up in the same regions for them to travel to.