The grocery store sector faced financial challenges in 2024, with several chains closing stores, filing for bankruptcy, and in some cases going out of business.
The reasons for the financial distress seemed to be repeated by each troubled chain — effects from the Covid-19 pandemic, rising business costs caused by inflation, increased interest rates on debt, fierce competition from big box and online retailers, and changing attitudes toward discretionary spending.
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Denver-based upscale grocery chain Choice Market shut down operations permanently after it was unable to successfully restructure its business.
Related: Distressed iconic food brand files for Chapter 11 bankruptcy
The company originally filed for Chapter 11 bankruptcy on May 6, 2024, to reorganize its business and secure new financing after a long struggle with the effects of the Covid-19 pandemic.
The company, which was established in 2017, planned to restructure its business model away from its upscale urban grocery stores and focus on small-format mini-mart locations. The company’s plan to launch its new direction in six to nine months failed, and it decided to end operations.
The company filed a petition on Oct. 4, 2024, to convert its Chapter 11 case to Chapter 7 liquidation in the U.S. Bankruptcy Court for the District of Colorado in Denver.
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Ahold Delhaize’s regional grocery chain Stop and Shop in July 2024 said that it would close 32 of its 397 stores located in Connecticut, Massachusetts, New Jersey, Rhode Island, and New York.
The company’s CEO JJ Fleeman revealed serious problems at the chain in announcing the closures.
“The value proposition and pricing at Stop & Shop are simply not strong enough,” Fleeman revealed about the store closings.
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Grocery Outlet cancels store leases, lays off workers
And now the parent company of popular discount grocery store chain Grocery Outlet revealed that it is canceling 23 store leases of unopened stores in suboptimal locations, 15 of which were planned to open in 2025 and eight that were planned in 2026, as part of a restructuring plan that began in the fourth quarter of 2024, according to a Securities and Exchange Commission Form 8-K report filed on Feb. 25.
Related: Popular barbecue restaurant chain files for Chapter 11 bankruptcy
Grocery Outlet Holding Corp. (GO) also said that it would cancel capital-intensive warehouse projects and instead invest in lower-cost distribution centers for dry goods. The company reported it also informed 40 employees that they would be laid off in the first quarter of 2025.
More closings:
- Popular retail chain to close unprofitable store locations
- Bankrupt retail chain unloads store leases, key assets
- Popular discount retailer files bankruptcy, closes all stores
The Emeryville, Calif.-based company expects to complete all of the restructuring measures by the end of the first half of 2025. The plan is expected to incur total costs of $52 million to $61 million, with $36 million to $45 million of cash expenditures.
Grocery Outlet will open up to 20 fewer stores in 2025
The company said it plans to open 33 to 35 stores in 2025, Grocery Outlet chairman Eric Lindberg said during the company’s fourth quarter 2024 earnings call on Feb. 25, after originally saying last year that it would open 55 to 60 stores. The new projection means the grocery store chain will open 17 to 20 fewer stores in 2025.
Grocery Outlet beat expectations in the fourth quarter, according to Lindberg, as the grocery chain’s net sales rose 10.9% to $1.1 billion for the quarter ending Dec. 28, 2024, with comparable store sales rising by 2.7%.
“We delivered solid fourth quarter results, generating comps above expectations as customers responded to our improved value assortments,” Lindberg said in a company statement.
Grocery Outlet has 533 stores in 16 states, with 42 company-owned stores and the remaining 491 stores run by independent operators.
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