
Grocery Outlet S-1 - hhs
https://www.sec.gov/Archives/edgar/data/1771515/000119312519145450/d710724ds1.htm
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batbomb
... 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.

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tedmiston
First time hearing of Grocery Outlet. Is it comparable to Trader Joe's? Or
maybe Aldi?

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bgorman
No - Grocery outlet sells name brands at a discount, but you never know what
will be there. Kind of like a Ross/Marshalls for food. Trader Joes only sells
its own private label.

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tschwimmer
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.

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chachra
A company that makes money? How boring. Yawn...

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gumby
Don’t worry: they may be profitable now, but they’ll eventually make it up in
volume.

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alteria
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.

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thisisit
Not that it is a fair comparison but if you look at Walmart - Gross Margin is
20ish% but net margins at 1.3%

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girlsrule1234
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.

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subway
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.

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ribs
Brennan’s...sigh

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smadge
Known lovingly in my town as “gross-out”

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jtchang
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.

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homero
Their new page says $10k. I've always wanted to own a grocery store.

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jason_slack
I actually thought that in my small town where Aldi's and Save-A-Lot already
exists amongst 3 other major grocery store names..there would be a market for
one.

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torbFan
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.

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konspence
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.

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boh
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.

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heywire
I think you misplaced a decimal point there...

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boh
Can't edit

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BMorearty
73 years from founding to IPO. :-O

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laluser
The VCs just want to keep these companies private longer and longer. It's
getting ridiculous /s.

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dsfyu404ed
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.

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crooked-v
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.

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sambroner
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.

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hrktb
> 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.

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dmitryminkovsky
Vanillin, can be produced without bean

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petarb
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.

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hckrnrd
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.

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SubiculumCode
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.

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tamal
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.

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SubiculumCode
I know that route. :)

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caffed
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).

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Dig1t
I _love_ Grocery Outlet. I'm so happy that they are doing well.

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hckrnrd
“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.

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kunday
When I first looked at this, my reaction was hold on! Is there a business
called Grocery Outlet? Downsides of living down under. :(

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XaspR8d
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.

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jlrubin
Good thing I kept all my old receipts with the discount meter -- can use the
money I saved to buy gross-out stock!

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mr_tristan
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.

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thisisit
"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.

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btgeekboy
I suspect it means, "products our distributors offered to us at a steep
discount." Like Big Lots or TJ Maxx would carry.

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benj111
I thought the T _J_ Maxx was a typo. In the UK we have T _K_ Maxx.

Turns out it was renamed in the UK to avoid confusion with TJ Hughes.

[https://en.m.wikipedia.org/wiki/TK_Maxx](https://en.m.wikipedia.org/wiki/TK_Maxx)

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ddtaylor
I like Grocery Outlet right now, should I be worried that long term they might
change in a negative way because of outside investors?

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paulcole
Of course you should! They’re talking about adding something like 500 new
stores in the states they’re already in and another 1500 in the bordering
states. The really good deals are going to get spread around more and your
local store is going to get less good stuff and more crap (assuming they can
find enough crap to stock the shelves). Or they’ll have to raise the price on
everything.

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stone-monkey
It seems to me like their reach might be exceeding their grasp with their
expansion intentions, but I'm hoping they just see a hidden opportunity that
requires this large cash infusion to handle.

What I'd like to see them do is use this scaling up to put dedicated resources
towards extensive scouting of regional vendors, leading to further
differentiation of Grocery outlets by location. Or maybe even just give them
greater variety of sales items in general.

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zwieback
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.

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jermaustin1
I've never seen one of these. I'm assuming it is like an Aldi or Trader Joe's?

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m0llusk
No. Aldi and Trader Joe's consistently stock items and carry their own labeled
products. Grocery Outlet are discounters who sell what is available cheap in
bulk at discounts of around 50%. Many staples are often not available but
occasionally high end products are sold at extremely low prices as producers
liquidate unsold inventory.

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gcb0
costco competitor? btw is sam club profitable or still a loss to hold off
competition?

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stone-monkey
Totally different business model - more like the grocery equivalent of Ross,
Marshalls, or TJ Maxx. Kind of similar to Aldi if you're familiar with that
chain.

Basically buy overstock or items near expiration date for bargain basement
prices and pass the savings to consumer. Think toblerones for a dollar, a pint
of Haagen Daaz for two bucks, and occasionally some more eclectic health food
products that bomb out of whole foods. They used to have these coconut milk
chia seed puddings 2-4 for a dollar depending on how well they were doing.
Hits the skinner box model of shopping by having variable inventory at cut
rate prices with a selection of stable items like bread and milk, meat,
vegetables, household cleaners, etc.

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gcb0
hum. sounds like the worst of both worlds...

I can almost understand the value for the chia pudding thing that still lack a
variety of off-brands. But haagen daaz, toblerone, et al are just the same
regular product today (sometimes even lower quality than the local small brand
of icecream/chocolate for example) with a markup because of the brand,
somewhat justified because the brand evokes attention to quality (e.g. no
expired product on display) and probably pays for better placement (e.g. top
shelf or a dedicated store). Now you have the so-so product from the name-
brand, with the markup removed because you removed the quality and placement!
Is marketing for those brands alone that good?

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stone-monkey
It's not about brand marketing - it's about having cheaper options. I don't
know where you go shopping, but at those prices I just listed, those name
brand products are still cheaper than comparable products, local or otherwise.

It's not just removing the markup - they're usually priced at a discount
relative to competitors. Also, in my area (SF), local products tend to be
priced at a premium relative to standard rates for national brands. So for the
ice cream example, the local pint normally would range anywhere from 5-10
dollars, whereas buying a pint of Haagen Dazs would run you about 4 bucks.
Now, when I go to grocery outlet to pick up a two dollar pint of ice cream,
I'm not buying the pint because it's brand name product for cheap relative to
its normal cost - it's cheap relative to the cost of any ice cream. There's no
comparable product at two dollars a pint.

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purplezooey
Wish they had more fresh produce options. seems that they specialize in
processed foods.

