My family has stopped observing the annual Shraddha for my grandfather. Is there any story in the Satcharita about the importance of continuing these rites?

Yes, Chapter 4 recounts the story of Bhagwantrao Kshirsagar, whose father was a great devotee of Vitthal and a friend of Sai Baba. After his father passed away, Bhagwantrao neglected the household worship, food offerings, and even the annual Shraddha (death anniversary). When he came to Shirdi, Sai Baba revealed that he had pulled him there specifically to address this. Baba told him, "He never offers food (Naivedya); he keeps me hungry too... He keeps Vitthal hungry too." Baba then declared his intention to remind Bhagwantrao and "put him back to worship," highlighting the importance Baba placed on continuing such ancestral traditions.