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... bargain market.

I live across the street from one. It's effectively my pantry, so I go there quite a bit, but the same way they have opportunistic products I'm shopping opportunistically half the time. If it wasn't so close (and Safeway wasn't so shitty) I'd probably go much less frequently, but I can't complain much.

Their produce has gotten a little better, their meat too. Some staples are variable (eggs only in Jumbo size, shit for olive oil, mayonnaise 1 week before it expires), but if you go there with an open mind and relatively frequently.

First time hearing of Grocery Outlet. Is it comparable to Trader Joe's? Or maybe Aldi?
Despite trying to like Grocery Outlet, I can’t say I do. The lack of reliable inventory is incredibly annoying. There have been many times I have gone shopping there only to find they had no peanut butter, or no mayo or something equally as pedestrian. For me, it’s not worth the savings to forgo consistency.
A company that makes money? How boring. Yawn...
Don’t worry: they may be profitable now, but they’ll eventually make it up in volume.
30% Gross margin leading to an overall margin of under 1%, wow!

I knew margins in the grocery business were low, but never expected it to be this close.

Not that it is a fair comparison but if you look at Walmart - Gross Margin is 20ish% but net margins at 1.3%
Back in the 90s when I was building BI software for grocers, the average margin across the whole industry was 1.1%.

Since then there's been an enormous amount of consolidation in the grocery industry... but I wouldn't be surprised to learn the margin hasn't changed.

I am very happy to see this. During my time at Berkeley, Grocery Outlet was easily the cheapest option for groceries and really spread my (very thin) budget. Unfortunately they closed the Berkeley location (it was way down University) in favor of some flashy new apartments.
The Berkeley location was also their corporate HQ.

I think 90% of my meals were from GO (with the remaining 10% split between E&J BBQ and Brennan's) when I lived in Berkeley.

Known lovingly in my town as “gross-out”
I love grocery outlet. I actually inquired about how to franchise one and they are serious about who gets to open one. The capital requirements are around 1MM to get started.
Their new page says $10k. I've always wanted to own a grocery store.
You never know what you'll find at a Grocery Outlet, and sometimes the deals are absolutely ridiculous. I went once during lunch and they were selling five-pack boxes of Kind Bars for 25-cents per box. A month out from expiration. Insane!

I bought about 15 boxes and just shared them among my team/roommates.

I don't have a strong opinion either way on this company (usually enjoy going to their stores), but it seems odd how many of these comments are rave reviews of them, bordering on advertisement.
If anyone is thinking investing, I'd be mindful of what they themselves call "substantial debt obligations" ($8.5B). They were bought by Hellman & Friedman, a PE firm, in 2014, who will retain controlling shares. PE firms tend to buy companies with a load of debt that the purchased company then has to pay off. See Toys R Us for the potential pitfalls of that arrangement.
I think you misplaced a decimal point there...
73 years from founding to IPO. :-O
The VCs just want to keep these companies private longer and longer. It's getting ridiculous /s.
You make it seem like that was a goal

More likely some key management died allowing the line of succession to punt it onto the markets for a new piggy bank

This sounds like Ocean State Job Lot, Surplus Center or Marden's but with just food. The business model is well proven (be flexible about what you buy, buy stuff suppliers need to unload at a steep discount, pass some of that discount on to consumers). There's some extra complexity coming from the fact that food needs to be handled more carefully and sold more quickly but I don't see that as being insurmountable especially since they've clearly been successful at it for years.
I haven't lived in Maine in ages, but I have fond memories of the discount book and computer software bins at Marden's. I got full boxed copies of Homeworld and Starsiege there, manuals and all, for a pittance, plus lots of weird niche stuff like Vangers.
I love this place, and I love to hate on this place. We used to go in and not be able to find vanilla (!!!) ice cream. Or there’d only be whole wheat pasta. There’d often only be two people in the store and one of their best employees was deaf (just hard to locate.)

On the other hand, the prices were unbeatable, and it turns out strawberry shortcake dairy free frozen dessert is pretty solid.

> vanilla

I’m always amazed how much it is seen as a given compared how of a PITA it is to grow vanilla, at least relatively to strawberries or bananas for instance.

There were a bunch of reports last year about a global shortage of vanilla because bad weather in Madagascar wiped out most of the crop. Apparently at some point, it was more expensive than silver. At the same time, a bunch of big ice cream manufacturers switched to using natural vanilla instead of vanillin, which put even more pressure on the supply chain.

https://www.purewow.com/news/vanilla-shortage-prices-increas...

turns out strawberry shortcake dairy free frozen dessert is pretty solid.

Depends on the temp I guess....

Apparently in 2014 Hellman & Friedman, a private equity investment firm acquired 80% of Grocery Outlet from Berkshire Partners. (Page 6 in the S-1)

Hence the possible pressure to realize a RoI.

That’s what it smells like to me too. Could be wrong, but acquiring 80% of the company, then taking it public doesn’t seem like a particularly compelling reason for joe stock picker to buy.
Grocery Outlet kicks ass. Sure you don't know if you'll find what you wanted , but you'll definitely find something you didn't know you wanted, and at kick-ass prices.
In my family I always volunteer to go to Grocery Outlet. I have an optimized route throughout the store so I can check every shelf for anything new.
It's my favorite place to be. Reject organic food and unique flavors for dirt cheap. Wine at marked off prices with an annual 20% blanket wine sale. There are some things that act as dinners for me for $0.50.
I love this place. I live 1/2 a block away from one. Where else can you combine deal hunting, hoarding and grocery shopping???

“I don’t know when they’ll have this again, I better buy 6 of them” is something I’ve said to myself many times.

Also I have gotten seriously good Napa/Sonoma wine here for good prices (orig $120 GO 25.99).

I _love_ Grocery Outlet. I'm so happy that they are doing well.
“Value-Oriented Brand Aligned with Favorable Consumer Trends. We believe that consumers’ search for value is the new normal in retail. The success of off-price retailers represents a secular consumer shift toward value as a leading factor in purchasing decisions. Moreover, as Millennials mature and Baby Boomers age, they are increasingly focused on value, driving shopper traffic towards the deep discount channel. According to published research, between 1988 and 2016, traditional grocery retailers ceded over 45 percentage points of market share to non-traditional grocery stores, including convenience stores, wholesale clubs, supercenters, dollar stores, drug stores and discounters. These trends have continued even after the completion of recessionary cycles, indicating that value remains a leading factor in consumers’ retail purchasing decisions despite the return of stronger economic conditions. According to the National Retail Federation, 89% of all shoppers across geographies, household incomes, genders and age demographics, shop at discount retailers, including off-price, dollar, outlet and discount grocery stores. We have spent decades building our IO and opportunistic purchasing models to offer deep discounts in a customer-friendly store environment, which enables us to take advantage of this ongoing preference for value.”

This seems like most compelling argument in favor of the business model. Though, this IPO seems like a sucker bet.

When I first looked at this, my reaction was hold on! Is there a business called Grocery Outlet? Downsides of living down under. :(
To be fair, even most of the United States hasn't heard of this chain. YC's location bias makes it sound wider-spread than it is.
Good thing I kept all my old receipts with the discount meter -- can use the money I saved to buy gross-out stock!
Grocery Outlet will on occasion have significant deals on things like gluten-free ingredients, things that might not exist at Safeway, but do at Whole Foods (at significantly higher prices). This is an interesting wrinkle: a lot of budget stores just completely avoid products that might appeal to the "luxury" WF customer. But, I've seen trust start to develop with a broad demographic. People using social media to tell each other when GO has some of these expensive products.

I've not seen this broad of a demographic reach with other budget stores. GO seems to be purely about "buying cheap, sell at a margin", no matter what it is.

"Our product offering is ever-changing with a constant rotation of opportunistic products, complemented by an assortment of competitively priced everyday staples across grocery, produce, refrigerated and frozen foods, beer and wine, fresh meat and seafood, general merchandise and health and beauty care"

What do they mean by "opportunistic products"? Google fails to come up with any proper explanation.

I like Grocery Outlet right now, should I be worried that long term they might change in a negative way because of outside investors?
I like this place although it's morphing from an outlet with super-cheap expired or leftover stock to a regular grocery store. Mine also carries a lot of organic and hippie food at reasonable prices.
I've never seen one of these. I'm assuming it is like an Aldi or Trader Joe's?
costco competitor? btw is sam club profitable or still a loss to hold off competition?
Wish they had more fresh produce options. seems that they specialize in processed foods.