Dive Brief:

• Household penetration for grocery foodservice grew to 94% in 2019, according to the Food Marketing Institute’s (FMI) 2019 Power of Foodservice at Retail report, with 63% of shoppers turning to semi-prepared and fully prepared foods from retail foodservice for dinner solutions.
• Sixty-eight percent of shoppers say they are interested ready-to-eat, grab-and-go meals, making it the most popular option in retail foodservice. Grab-and-go, heat-and-eat is the second most popular selection, garnering interest from 63% of shoppers.
• While 57% of shoppers have a grocery store app downloaded, only 38% of grocery app users have placed an order for deli prepared foods from a grocery store — a gap that FMI said retailers can address by increasing awareness of foodservice.

Dive Insight:

Annual sales in prepared foods now exceed $12.7 billion and are driving total sales growth for the entire deli department. Among shoppers who visit the deli during their shopping trips, nearly 71% include a prepared food purchase — though the number of shopping trips that includes a visit to the deli is just 17.6%. The number of annual deli trips has increased in the last two years from 18 to 20. 

While the findings are mostly positive, FMI notes purchasing frequency of prepared foods could be improved. With less than a quarter of consumer trips including deli visits, food retailers have a significant opportunity to attract new shoppers and substantially boost foodservice sales with more interesting options and fresher fare.

Recent store remodels and upgrades in the industry show that many retailers are aware of the issue and want to remedy it. Sprouts Farmers Market, for example, is emphasizing a better in-store deli experience in all of its new and remodeled stores, and Tops Markets is remodeling stores to include enhanced deli departments. 

The best-selling items in prepared foods aren’t surprising. Classic go-to items including salads (34%) and sandwiches (21%) are currently top performers, followed by sushi, appetizers, soup and complete meals.

Shoppers are taking note of the limited assortment, with 88% saying they want to see more new items and flavors, according to the report. About 31% of shoppers said they’d like to see flavors and menu options rotate on a monthly basis, and younger generations want more diverse food options with universal appeal.

Restaurants are still a major obstacle for grocers that want to boost their prepared food sales. When shoppers decide they don’t want to cook dinner, one quarter reported that they "never" or "hardly" purchase grocery prepared foods over ordering from a restaurant, down from 31% in 2018. About 62% of shoppers say they "sometimes" order from grocery foodservice, an increase from 53% last year. 

While there is still a long way for grocery stores to go in being top-of-mind for last-minute meals, they’re making progress. In addition to refreshing and promoting options in-store, grocers are forging new partnerships to offer prepared foods online.