Big Expansion for Grocery Outlet, a Favorite among Frugal Foodies in the West

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The store’s nickname may be “Gross Out,” but fans swear by the chain for its great values and decent selection of fresh produce, meats, and dairy products. Like other discount supermarkets, the tradeoff at Grocery Outlet is cheaper prices but less selection—”like a blend of a dollar store and Trader Joe’s,” in one observer’s opinion.

The San Francisco Chronicle reports that business at Grocery Outlet is good while the economy has been bad:

Grocery Outlet, which offers about half off supermarket prices by selling manufacturers’ excess inventory, rang up 5 million additional customer transactions last year compared with the prior year and has clocked double-digit annual sales growth since 2008.

Backed with a new infusion of capital (it won’t say how much) from Boston’s Berkshire Partners, Grocery Outlet is planning significant growth, including new stores in Pinole, Concord, Dublin, Gilroy and Watsonville this year, as well as expansion in its other core markets of Oregon and Washington. It also has stores in Arizona, Idaho and Nevada.

“We could conceivably double the size of the company in the next five to seven years, adding about 15 to 20 new stores a year,” said co-CEO Eric Lindberg, also 39, grandson-in-law of the founder.

Grocery Outlets don’t have butchers or bakeries, and the selection is puny compared to the typical supermarket—a “Gross Out” probably contains about one-tenth of the 40,000 products on the shelves of a standard grocery store. But the chain, which got its start by selling mostly frozen foods, canned goods, and other non-perishable items, has expanded its roster with offerings of cereal, meat, bread, and fresh fruits and vegetables. You never know what you’ll find—or won’t find—on the shelves, however, so only the most creative cooks can do all of their shopping at a Grocery Outlet. Regardless, many consumers enjoy the “treasure hunt” part of the experience:

“Supermarket guru” Phil Lempert, the food-trends editor on NBC’s “Today” show, is a huge fan.

“I love Grocery Outlet,” he said one recent afternoon on a tour of its latest addition, a sparkling new store at a strip mall in Pinole. “It’s like a blend of a dollar store and Trader Joe’s. They’re very intelligent about their relationship with customers, (promoting) the emotional, fun, adventurous side of shopping.”

Well, you gotta give the store credit: They somehow figured out a way to turn a chore into something that can be described as “fun” and “adventurous.”

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