The 'Renaissance' of Food Service: How American Grocers Are Upgrading Deli and Prepared Meal Operations

From gourmet sandwiches to pre-made salads, The Save Mart Companies has invested "a lot" of work in elevating its prepared foods, said Mark Van Buskirk, the company's senior vice president of merchandising and marketing.

The grocery company, which operates about 200 supermarkets in California and northern Nevada under banners such as Save Mart, Lucky, and FoodMaxx, recently overhauled its sandwich program, grab-and-go salads, and glass-case salads, Van Buskirk said. Earlier this year, the company also launched a line of gourmet sandwiches.

Van Buskirk noted that the changes are aimed at providing consumers with healthy alternatives to complement the "base program" centered on rotisserie and fried chicken.

"You can come in and get a high-quality meal at a price that is more cost-effective than going to a restaurant," Van Buskirk said.

Rick Stein, vice president of fresh foods at the industry group FMI—The Food Industry Association, said its research shows that grocery store foodservice is increasingly replacing meals from fast-food or fast-casual restaurants.

"We are definitely seeing a renaissance in the foodservice department, with retailers investing heavily in these departments after many were closed during the pandemic," Stein wrote in an email. "Retailers have invested in chefs and professionals, increased space allocation, and expanded categories to revitalize the foodservice department and make it more prominent in the minds of consumers."

While some grocers are adding in-store restaurants, food halls, and made-to-order counters, others are focusing on bringing their deli and prepared meals up to restaurant quality.

However, with increasing competition from restaurant chains and convenience stores like Foxtrot, supermarkets are differentiating themselves through innovative products, offers, labor models, and shopping experiences, not just competing on price.

Deli prepared foods capture a larger share of consumption

According to research from Circana, September was a significant month for the deli prepared foods category, with strong sales of pizza, soup, and chili indicating that consumers are choosing alternatives to home cooking or restaurant dining.

"The strong performance of deli prepared foods continues to be encouraging," said Jonna Parker, who leads the fresh foods team at Circana, in the latest report from 210 Analytics. "This reflects a market reality: consumers need a break from cooking occasionally, but in the ongoing balance, the deli department is increasingly winning these consumption occasions that would otherwise go to restaurants."

According to Circana data cited by 210 Analytics, deli prepared food sales reached $1.9 billion in September, with unit sales up 0.1% and dollar sales up 2.7% compared to the same period last year.

"In today's market, the ultimate value is a combination of price with elements like convenience, health, taste, and experience"—and these are areas where grocery deli prepared foods already have an advantage, Parker said.

FMI's research also found that the impact of hybrid work models on consumer eating habits is driving growth in deli prepared foods, Stein said. Generational shopping habits are also influencing deli prepared food sales.

"We do see Gen Z and millennials consuming grocery deli prepared foods more frequently, and they both indicate they expect to increase their foodservice purchases in the future," Stein said.

Stein said that more than half of shoppers recently surveyed by FMI believe that grocery deli prepared foods offer better value compared to dining at fast-food or fast-casual restaurants or ordering takeout.

Stein noted that high inflation curbing consumer spending, consumers mixing home cooking with prepared meals, and cooking fatigue are the main factors driving heightened interest in prepared foods.

Catering to consumer demand for meals

ShopRite's "Fresh to Table" concept emphasizes high-quality ingredients in a one-stop meal shop, with department displays featuring messages like "Rah, Rah, Rotisserie" and "Made with love for later."

This newly developed department focuses on ready-to-cook, ready-to-heat, and ready-to-eat options, paired with private label products. A ShopRite store in Warminster, Pennsylvania, recently became the seventh location to launch the Fresh to Table concept this year.

Winn-Dixie and Meijer are also pushing ready-to-cook, ready-to-heat, and ready-to-eat options, while Food Lion's recent upgrades at nearly 50 stores in three North Carolina metro areas included expanding product offerings, with a focus on providing various "affordable and easy meal solutions."

With food prices remaining high, promoting affordability is a key marketing strategy for grocers. For example, a Giant Food store in Washington, D.C., offers deli meal deals in a display case near the entrance, including a salad for $9 with a 20-ounce Coca-Cola product and a bag of chips, or a half submarine sandwich for $8 plus a drink and chips.

Stein said shoppers are considering more than just price and quality; convenience, entertainment, and health and wellness are also becoming part of shoppers' definition of value.

Limited-time offers—already popular in convenience stores—are another tactic grocers have recently used to spark purchase enthusiasm. For example, Publix sold a Nashville hot chicken sandwich in its deli department from early April through the end of June.

Grocers are also increasingly focusing on the quality tier of their offerings. At the Metropolitan Market store in West Seattle, shoppers can build their own fresh poke bowls for $18 per pound. The store's poke bar, located near the checkout, offers a variety of fresh fish, rice, and toppings such as seaweed, cucumber, and wasabi.

Meanwhile, The Save Mart Companies is seeking to compete for meal occasions by offering deals and elevating quality. Van Buskirk said its "extensive" hot foods program includes rotisserie chicken, meatloaf, BBQ ribs, chicken pot pie, and hot turkey breast, allowing consumers to bundle purchases.

"I would put our chicken strips up against anyone's in the market," Van Buskirk said.

Some grocers are driving meal consumption by emphasizing global flavors. This summer, Meijer called on more food manufacturers to join its Frederik's by Meijer brand, a private label food line focused on global flavors, including frozen and refrigerated meals such as pizza, pasta, and Greek feta salad, noting that the brand has become a "customer favorite" since its launch two years ago.

Other companies are using technology to innovate self-service options. In March, Schnuck Markets introduced a tech-driven salad bar designed by Sweden's Picadeli at a store in Missouri. The Picadeli unit features lids that remain closed except when customers are serving themselves, uses artificial intelligence to track sales patterns and decide when to order products, and also features digital labels with product descriptions.

Geoff Wexler, vice president of deli and prepared foods at Schnucks, wrote in an email that customers have praised the unit's assortment and food safety. After receiving an "overwhelmingly positive" response, Wexler said the grocer accelerated its expansion and has now equipped 51 Schnucks and Eatwell Market stores with Picadeli "smart salad bars."

Exploring successful labor models

Grocers looking to capture the essence of restaurant dining can emulate restaurant staffing models.

Wegmans, known to consumers and the industry for its foodservice, has an executive chef leading the culinary team at each of its stores. Recently opened locations include a store in Reston, Virginia, with 95 culinary employees, and a store in Alexandria, Virginia, with 105 employees.

Wegmans' careers website details the career paths for its culinary team, including positions such as prep cook, line cook, lead cook, sous chef, and executive chef.

The grocery chain also offers a culinary management trainee position for people to learn "how to influence culinary standards while mastering the core recipes, techniques, and other skills needed to become a sous chef."

Similarly, Chicago's Dom's Kitchen & Market uses restaurant terminology, such as sous chef, in the staffing structure of "The Kitchen," its collection of deli and fresh meal stations, said Don Fitzgerald, Dom's CEO.

Fitzgerald noted that Dom's recently hired Chef James Klewin, who has more than two decades of culinary experience, as executive chef and culinary director, and veteran hospitality leader Alain Balandra Uy as director of hospitality.

Fitzgerald said Dom's wants its culinary and hospitality leaders to bring a "restaurant experience and feel," rather than feeling like department managers, and to incorporate that experience into their roles and the company's stores.

Sam Silverstein and Jeff Wells contributed reporting to this article.