What’s driving deli prepared food sales?

The convenience of prepared foods is helping drive sales in the supermarket deli department, a trend that may be getting a boost from consumers seeking to cut down on the costs of dining out in restaurants.

“Curbing restaurant spending is a very popular way to save on total food spending,” Anne-Marie Roerink, president of 210 Analytics, told SN. “Consumers recognize that cooking at home is cheaper, but many are also constantly balancing time, money and health as they navigate life.”

Deli prepared foods was one of the few areas in the store that experienced a slight increase in unit sales in 2022, according to a year-end report she compiled for the International Dairy Deli Bakery Association (IDDBA). Many other supermarket categories saw unit sales decline as prices rose amid double-digit inflation.

“When compared to the pre-pandemic normal, the engagement [in deli prepared] is very high, especially considering that so many more people are still working from home,” Roerink told SN.

The deli prepared foods category, which includes subcategories such as entrées, prepared meats, salads, sandwiches and appetizers, recorded dollar sales gains of 11.9% in 2022, reaching $23.4 billion, although unit sales were only up only slightly, at 0.1%, according to the year-end IDDBA report.

High-income households, especially, are seeking convenience-focused meal solutions, Roerink said, which may be helping drive sales of deli entrées (up 15.7% in dollars and 6.2% in units). In addition, as more companies have reinstated return-to-office policies, consumers are spending more on out-of-home meals again, including picking up lunch from supermarket delis in some areas.

“This is very much true for a lunchtime favorite, soups and chili, which are also sitting in the sweet-spot season right now,” said Roerink.

Soup and chili sales were up 21.2% in dollars and 10.3% in units in 2022.

Deli pizza, up 13.8% in dollar sales and 6.5% in units, also had a good year last year as it rebounded from a downturn in sales during the pandemic.

“I think this is a great opportunity for the salad bar or even salad kits in the produce department to be the plus-one to deli pizza,” said Roerink.

Grab-and-go deli meats and cheeses also had a big year in 2022, as the pandemic-era trend continued to show momentum.

“Grab-and-go deli meats and cheeses have accomplished triple-digit growth upon triple-digit growth, and now add one more year with double-digit growth,” said Roerink. “Needless to say, this is not something we see often.”

Crucial to success in this category is offering a variety of package sizes, so that consumers looking for less than a full pound can find what they need without going to the service counter, she said. In addition, retailers need to ensure that they have enough product in-stock during peak shopping times.

Grab-and-go could also be an opportunity to introduce customers to different flavors or brands, especially in small package sizes that minimize shoppers’ risk, Roerink said.

Retailers expand prepared foods

Retailers have sought to capitalize on consumer demand for convenience and value in the deli with a variety of strategies, including expanding their prepared-foods offerings.

At Martin’s Super Markets in Indiana, a division of Grand Rapids, Mich.-based SpartanNash, the retailer completed a major renovation in January that included the addition of three signature food service programs: signature smokehouse BBQ, artisan pizza and an expansive bagel offering with store-made cream cheese and other spreads, Bennett Morgan, senior VP and chief merchandising officer, SpartanNash, told SN.

“As additions to a variety of other existing programs — signature fried chicken, meals-for-one, paninis, fresh-made salads, wraps and more — the deli department is becoming more of a ‘food court’ experience,” he said. “Store guests can experience restaurant quality, fast-casual food options for take-home enjoyment or, in some stores, they can enjoy a dine-in option as well.”

Martin’s Super Markets' signature smokehouse BBQ.

Convenience is also driving increased sales of meal solutions and entrées in SpartanNash’s Fresh & Finest by Our Family private label, which is known for its unique taste options, quality ingredients and value, said Morgan.

“Recently, we’ve seen an increased demand for our Fresh & Finest Meals for One and our Fresh & Finest pizza program, now entering its second year, which offers everything from delicious staple choices such as pepperoni and meat lovers to fun varieties like chicken bacon ranch with a hint of dill pickle,” he said.

The company’s Fresh & Finest sandwich program has also seen growth from grab-and-go options including wraps, subs, sliders and value-priced wedge sandwiches, Morgan said.

Meanwhile the company’s Fresh & Finest Meals for One program has introduced a family-sized line of its best sellers as a Meal for Four offering. Selections include meatloaf with mashed potatoes, beef tips with mushroom sauce, and General Tso’s chicken.

SpartanNash also recently launched the Fresh & Finest side dish program with sides such as Yukon gold scalloped potatoes and maple-glazed carrots, which can complement the company’s store-made rotisserie or fried chicken to build a complete meal. In addition, SpartanNash’s own-brand soup program will be moving to the Fresh & Finest label this year, with new flavors such as corn-and-potato chowder and cactus-and-beef chili, and will be offered in a smaller, 16-ounce pack size.