Prepared Foods a 'Mixed Bag' as Demand Changed Overnight

“Prepared foods is such a mixed bag,” says Jonna Parker, principal with IRI’s Fresh Center of Excellence. “Consumer demand changed overnight, and the lack of a lunchtime crowd threatened to single-handedly decimate the category.” Salad bars and hot bars were sidelined, packed lunches for offices and schools ceased, and traffic in the department came to a standstill at some stores.

But as the pandemic continues, the deli has become a new destination for refrigerated grab-and-go (particularly with side dishes and breakfast items), presumably as consumers grow tired of preparing their meals at home.  IRI finds that refrigerated packaged breakfasts that require consumers to add an egg or milk are resonating strongly with shoppers. “There’s a healthy halo with refrigerated prepared foods, including breakfast and eggs,” says Parker.

Sales of breakfast items are also strong in the prepared foods and meals category. While sales of entrees (with the exception of prepared meats, including rotisserie and fried chicken), soups, salads, sandwiches and pizza are all down, sales of breakfast items were up 15.6%. Looking at data from the 24 weeks ending Aug. 9, IRI finds that the dollar sales percent change on prepared breakfast items is 165% vs. three years ago. “Eggs are addressing a totally different consumer need now,” says Parker, who sees them as a micro trend in the future of deli prepared.

Meal accompaniments represent another breakout sensation in prepared foods. “Side dishes have done really well in the second stage of the pandemic,” affirms Parker, who points to mashed potatoes, rice, pasta, beans and fries/wedges/onion rings as popular meal accompaniments. “Prepackaged third-party UPC sides merchandised in the deli are also doing well. They don’t have to be hot, but they have to be convenient,” she says. Consumers clearly see value in purchasing a prepared side dish to accompany a main course made from scratch at home.

Looking ahead, Parker sees an opportunity to reinvent the deli once again, should the impending recession take hold. “Fifteen years ago, people thought the supermarket deli was in decline because it was too expensive. Then came the realization that the consumer valued high-quality prepared foods as a value over restaurant food. A convenient, on-the-go in-store experience defined the next years,” she remarks. Grocers will undoubtedly continue to adapt and evolve this category in the months and years ahead with shopper engagement top of mind.

Perimeter—Deli Prepared Foods and Topline

Total U.S. multioutlet | “YA” is the year ago for the same weeks ending 2019; 3 YA is the same weeks ending 2017 | IRI Unify in the Integrated Fresh database, which combines fixed- and random-weight items

Notes: All numbers represent percent changes of dollar sales; category by subcategory breakout tables are included for those with higher than 1% current dollar share, with the exception of soups and chili, which does not have subcategories

Source: IRI Syndicated Integrated Fresh database, which combines random- and fixed-weight brands/product types known to be sold in this department at the majority of retailers

Measures: Dollar sales refers to the total cumulative dollar sales sold for that product during the time period (not included, but used as reference); dollar sales change refers to the percent difference between the current and prior period for total dollar sales; dollar share to dept. refers to the total dollar sales of that product divided by the total dollar sales of the department to which it belongs; dollar share to category refers to the total dollar sales of that subcategory divided by the total dollar sales of the parent category