Discount grocers have been one of the most active growth stories in U.S. food retail, adding stores as shoppers keep hunting for lower prices. Now Grocery Outlet, the California-based chain known for bargain-name brands and surplus finds, is reversing part of that push after confirming a broad round of closures in 2026.
Grocery Outlet confirms a 36-store closure plan
Grocery Outlet said on March 4, 2026, that it plans to close 36 financially underperforming stores as part of what the company called an Optimization Plan. In its annual filing and related earnings disclosures, the retailer said the plan covers lease exits, operator agreement terminations, and other restructuring steps tied to those locations.
The scale is notable for a chain that ended 2025 with 570 stores across 16 states, according to Grocery Outlet’s year-end results. Grocery Dive reported the closures amount to about 6% of the company’s fleet, making this one of the larger retrenchments by a discount grocer this year.
Company leadership tied the move to a review of store performance rather than a full market retreat. On the earnings call, President and CEO Jason Potter said Grocery Outlet is not fully exiting any state, even as it shuts stores that no longer fit its profitability goals.
Eastern states are expected to feel the deepest impact
The biggest effect is expected in the East, where Grocery Outlet spent recent years extending beyond its traditional West Coast base. Grocery Dive, citing company disclosures and reporting, said 24 of the 36 closures are in the eastern United States, roughly 30% of the chain’s portfolio in that region.
That matters because states such as Pennsylvania, Ohio, New Jersey and Maryland were central to Grocery Outlet’s newer growth strategy. Several trade and consumer reports have pointed to those states as likely concentration points for closures, while California and Idaho are also expected to be affected.
What is not yet public is a complete, company-issued list of every store slated to close. Grocery Outlet has not released a comprehensive public breakdown by city or neighborhood, so customers in affected states may still be waiting for location-specific confirmation even as the broader closure count is established.
Executives say the chain expanded too quickly
The clearest explanation has come from the company itself. During its fourth-quarter earnings discussion, Potter said Grocery Outlet expanded too quickly in the East, a statement that has become central to how analysts and trade outlets are framing the closures.
The financial backdrop helps explain the reset. Grocery Dive reported Grocery Outlet posted a nearly $235 million operating loss and more than a $218 million net loss in the fourth quarter, while the company’s filings tied part of that pain to impairment and restructuring charges connected to weaker-performing stores.
Executives have also pointed to broader operating pressures. Trade coverage and company disclosures described rising costs, softer-than-expected performance in some newer markets, and the complexity of building supply chains and store economics outside the chain’s historical strongholds.
What shoppers should expect next
For customers, the immediate effect will vary by store and market. Grocery Outlet said the closures are tied to underperforming locations, which means some communities will lose a lower-price grocery option while nearby stores in stronger markets may remain open.
The company has also made clear that the closures are not the same as a halt to growth. Newsweek and Supermarket News reported Grocery Outlet still expects to open 30 to 33 new stores in 2026, even as it absorbs restructuring charges and works through inventory liquidation tied to the shutdowns.
That leaves shoppers with a mixed but defined outlook: fewer stores in weaker locations, continued openings where the economics look stronger, and a more selective approach to growth than the one that carried the chain rapidly across newer territory. For now, Grocery Outlet’s public position is that the closure plan is meant to improve profitability, not abandon expansion altogether.