Grocery Outlet Reins in Expansion: Map Reveals 36 Store Closures Nationwide
This analysis is based on original reporting from Grocery Dive. For ongoing coverage of the grocery industry, subscribe to the free daily Grocery Dive newsletter.
In a candid admission of overreach, Grocery Outlet Holding Corp. announced plans to close 36 stores across six states. The move, revealed during last week's fourth-quarter earnings call, signals a strategic retreat for a retailer known for its aggressive growth.
"Our expansion pace simply outstripped our ability to cultivate sustainable performance in some markets," President and CEO R.J. Sheedy stated on the call. While 24 of the closures are concentrated on the East Coast—including eight in Maryland, six each in New Jersey and Ohio, and four in Pennsylvania—the West Coast is not spared, with nine closures in California and three in Idaho.
The affected locations, now listed for sale by advisory firm Gordon Brothers, range from 14,000 to 30,000 square feet. The company emphasized it is not fully exiting any state and remains committed to long-term growth in the East, where 51 stores continue to be profitable.
This contraction follows Grocery Outlet's rapid East Coast build-out, which began with the 2011 acquisition of Pennsylvania-based Amelia's Grocery Outlet. The closures, representing about 6% of its total fleet, are expected to be completed by the end of the second quarter. The company anticipates restructuring charges of $14-$25 million in fiscal 2026 but projects an annual EBITDA improvement of roughly $12 million.
Concurrently, Grocery Outlet is reevaluating its 2024 acquisition, the 40-store United Grocery Outlet chain in the Southeast. Sheedy noted the business is "profitable and stable" but confirmed all options, including a potential sale, are on the table.
Despite the pullback, growth hasn't halted. The discounter plans to open 30-33 new stores in 2026, focusing on a "clustered" model for efficiency, and will remodel 150 locations. A notable shift in strategy will see new stores, like those recently opened in Virginia, initially run corporately to ensure profitability before being handed to independent operators.
Industry Voices:
"This is a necessary, if painful, correction. The discount grocery space is fiercely competitive, and disciplined site selection is everything. Closing 6% of stores to strengthen the remaining 94% is a smart long-term play." — Marcus Thorne, Retail Analyst at Berenson Capital.
"It's a classic case of growth for growth's sake. They chased store count over store quality, and now communities are losing affordable grocery options. Their 'clustered model' talk sounds like they're just giving up on making isolated locations work." — Deborah Choi, Founder of the Community Grocery Access Initiative.
"The financial mechanics are sound. Taking a one-time hit to shed underperformers will boost overall margins. The new corporate-run pilot in Virginia is an interesting experiment to de-risk future expansion." — Arjun Patel, Senior Associate at Gordon Brothers.
Recommended Reading