Grocery Outlet To Shut 24 Units In Region After $218M Q4 Loss

Discount grocer Grocery Outlet announced plans to close 24 underperforming stores in the Mid-Atlantic as the company moves to restructure its store network. The cuts follow a period of rapid expansion for the California-based company and are part of a larger 36-store national closure plan following a discouraging fourth quarter. Many of the stores will be shuttered by the end on this month.

Company executives said the decision followed a review of the chain’s store portfolio and acknowledged that the retailer had expanded too quickly in some markets and these closures were a direct correction. On a recent earnings call CEO Jason Potter noted the company felt these locations, “Did not have a viable path to profitability regardless of the operational support.” 

The company said the closures target locations that have been financially underperforming and are intended to improve its operating margins. It was noted that the retailer’s remaining 51 stores on the East Coast are profitable. 

The Emeryville, CA-headquartered retailer said the closures are part of an “optimization plan” aimed at improving profitability after a difficult financial year. The company reported a fourth quarter net loss of about $218 million, compared with a modest profit in the same period a year earlier.

“More work needs to be done than we expected,” Potter said during the earnings call while discussing the company’s performance and turnaround plan.

Founded in 1946, Grocery Outlet has built its business around an extreme value model, selling discounted name-brand groceries, closeouts and overstocks. The company refers to its deepest discounted product mix as an “Opportunistic Product Assortment.”

Grocery Outlet is unique amongst grocery stores as its network is built on independently operated stores under an operator franchise model.

While the chain has grown rapidly in recent years, management now appears to be recalibrating that growth strategy. At the end of 2025, the company reported 570 stores across 16 states. Potter mentioned the company would focus on a model refresh rollout to 150 of these stores this year. 

Despite the closures, Grocery Outlet said it still plans to open roughly 30 to 33 new stores in fiscal 2026. However, the company noted that it would use a disciplined approach for its continued expansion strategy with a more clustered model to improve supply chain efficiency and marketing.

In one of the biggest changes announced, the company will adjust how it goes to market. New locations will start as company-run stores, before they are handed to independent operators. The retailer said it is looking to hand off a “more stable product” to its operators after year one. 

The discounter’s announcement comes amid a broader wave of retail consolidation and store closures across the U.S. as companies reassess their physical footprints. Industry analysts note that the move reflects broader pressures facing grocery and retail operators, including rising labor costs, inflation and shifting consumer spending patterns.

A key point that was made on the earnings call was that the company feels that it let its leadership as a value proposition slip in Q4 versus its peers. For a discount chain to lose even some of its value perception can be a challenge. The company disclosed that it may take three to six months to reclaim that value position.

For Grocery Outlet, the current restructuring represents a strategic reset after a period of aggressive growth – one it feels is designed to stabilize performance and position the company for more disciplined expansion in the years ahead.

Of the 36 stores slated to close, most are located in the eastern U.S., where the company has been expanding its footprint in recent years. A total of 12 stores from this list will be closed in Idaho and California.

Of the stores to be shuttered, eight will close in Maryland; six will close in New jersey and four in Pennsylvania. An additional six stores will close in Ohio. 

In Maryland, the eight stores scheduled to shut down include locations in Catonsville, Columbia, Cockeysville, Nottingham, Owings Mills, Rosedale, Westminster, and Hagerstown. Maryland will keep its stores in Beltsville, Edgewood, Eldersburg, Elkton, Glen Burnie, Salisbury, and Windsor Mill. 

New Jersey stores slated to close including six locations in Delran, Gibbstown, Hazlet, Mays Landing, Rio Grande, and Sicklerville. New Jersey will have three remaining stores in Medford, Hamilton Township, and Deptford. 

In Pennsylvania, the four stores slated to close are Kennett Square, two Philadelphia locations at Welsh Road and West Oregon Avenue, and its Meadville store in Western PA. Pennsylvania will continue to have the majority of Grocery Outlet’s East Coast locations with 35 remaining stores. Delaware and Connecticut both have a singular store within each state.

Ohio stores scheduled to close include six locations in Canton, Cincinnati, Lorain, Ontario, Parma, and Youngstown. Ohio will keep five remaining stores.