Grocery Outlet closing 36 stores in the US. Here's why.

Grocery Outlet is closing 36 locations in the near future because the business "expanded too quickly," the California-based bargain retailer announced during an earnings call March 4.

During the call, Grocery Outlet President and CEO Jason Potter, who joined the company just over a year ago, said the retailer's fourth quarter results were "unacceptable," and there is "more work to do than we expected."

In 2025, the grocery retailer opened 42 new stores and closed five. By the end of the year, the company had 570 stores across 16 states, per the call.

According to Potter, the bargain grocery store analyzed its portfolio and ultimately decided to close 36 locations, 24 of which are in the eastern United States and represent about 30% of the region’s stores.

"We are not fully exiting any state, and we believe we have a meaningful opportunity to grow in the east over the long term," Potter said. "However, it's clear now that we expanded too quickly, and these closures are a direct correction."

Potter added that the grocery retailer’s remaining 51 stores in the eastern U.S. have been profitable and ended the fourth quarter with a 3.3% increase in sales. The closures, Potter said, will improve the company’s adjusted earnings before interest, taxes and depreciation to about $12 million.

USA TODAY did not immediately receive a response when it asked Grocery Outlet on March 5 for a complete list of closures and dates.

Here’s what to know about the looming Grocery Outlet closures.

Grocery Outlet is still expanding, refreshing and remodeling stores, CEO says

Potter said that over the past six months, the company was cautiously confident it was headed in the right direction because it experienced three consecutive months of sales improvement. New stores that opened in 2025 were also performing well, he added.

However, in late September, sales began to decline, partially due to marketing issues and Electronic Benefits Transfer (EBT) distributions that "negatively impacted our SNAP business and affordability," according to Potter.

"Pressure on our core customer increased more than we'd expected," Potter added, noting that "basket pressure intensified" for the company’s core customers, leading to a dip in sales that continued into January 2026.

The company began to speed up its store refresh program, Potter said, referring to Grocery Outlet's attempts at remodeling existing stores. The retailer has focused on remodeling since at least 2020, per a filing with the U.S. Securities and Exchange Commission. Potter said the remodel program’s goal is to "sharpen" customers' in-store experience.

What's next for Grocery Outlet?

Moving forward, Potter said the company’s focus will be redirected to its "model refresh rollout of 150 stores this year."

Grocery Outlet will also open another 30 to 33 new stores in 2026 under a more "disciplined approach" or "clustered model," to improve supply chain efficiency, according to Potter.

Additionally, the company will invest in promotions for fresh products to get customers excited, Potter said. He anticipates the business will invest roughly $20 million into promotions.

Chief Financial Officer Christopher Miller also spoke on the call and said the 36 planned store closures will "moderate revenue growth" and ultimately result in a 2% increase for the company's gross revenue.

Saleen Martin is a reporter on USA TODAY's NOW team. She is from Norfolk, Virginia – the 757. Email her at [email protected].