This is my thought too. Pretty much the minimum transaction cost for a grocery store is 1.65% (per Visa's published info) so if you buy a $500 VGC it's likely costing them ~$8, which is more than the VGC purchase fee and that's assuming they get all of the purchase fee.

My guess is that most grocery stores assume they will sell enough low dollar amount gift cards to make a profit on gift cards, on the whole.