Sarah Montgomery   |   March 15, 2023

Unexpected Recession Outcome: The Prepared Foods Opportunity

“The need for prepared foods will only increase as consumers crave quick, convenient, healthy, fresh meals. And not just in-person: some 40% of online sales are now being generated by fresh food departments.”

If one expectation from peak pandemic retail has stuck with consumers, it’s the expectation of high-quality fresh food from the grocery store. In fact, this need has only been intensified by the remote work movement that began during the pandemic and is expected to persevere. There’s growing pressure on grocers to significantly expand offerings of prepared foods like sandwiches and salads.

Prepared foods are also a big value-add for the health-conscious shopper; because nowadays, 50% of consumersprioritize healthy eating. Consumers who look for healthy, convenient options often find grab-and-go options meeting that need.  

The more consumers look for that fresh, ready-to-eat option, the more retailers need to adapt to the expectation. Many stores now dedicate more space to prepared food sections, ranging from simple self-serve counters to full-fledged cafes. Some stores—Wegmans’, H-E-B, Whole Foods, and Hy-Vee to name a few—even offer seating areas where customers can enjoy their meals on-site, stealing valuable meal dollars away from would-be restaurant goers looking for a quick meal before or after buying groceries.  

Variety and selection are key when it comes to pre-made food competition. Grocers that feature a wide range of items, from pre-made sandwiches, salads, soups, sushi, pizza, fried and rotisserie chicken will capture an equally wide range of customer needs; from the grab-and-go work lunch to the family dinner night at home. While grocers typically sell these items at a premium price compared to their raw ingredients, the convenience factor appeals to many consumers and makes up through gains in frequency.  

What Fresh Food Means For Prepared Foods

Prepared foods continue to be a hot category for supermarkets and other food retailers. The meal solutions trend of prepared foods skyrocketed during the pandemic as restaurants closed, and now prepared foods for grocers are growing at an annual rate of more than 6%, according to Technomics. Where customers want quick and easy foods, a grocer that can deliver on convenience and fresh will always win. 

Three fresh food options in particular are seeing a major demand surge in grocery:

  • Prepared Foods: In 2022 purchase frequency increased for shoppers buying deli prepared foods. FMI reported 11% of grocery customers purchase deli prepared foods every few days (versus 9% in 2021), and 6% do so just about every day (vs. 4% in 2021). Prepared foods are becoming increasingly popular due to their convenience, variety, and quality in a healthy meal solution.  
  • Made-to-Order: As consumers look for more customized options to meet their specific dietary needs and preferences, made-to-order fits the bill. According to a Datassential study, 66% of consumers say they would like the option to customize their food orders. This trend is particularly popular among younger consumers, with 80% of Gen Z and 74% of millennials saying they prefer customizable options. Personalization doesn’t just apply to consumer data; it can live right inside the grocery store, with a variety of customizable made-to-order options for the choosier shopper.  
  • Grab-and-Go: Convenience continues to reign post-pandemic. A consumer looking for a quick meal solution wants it pre-packaged and easy to find. A 2022 FMI study found more than 80% of grocers increasing the space they allocate to fresh-prepared grab-and-go products, and when asked their best chance at fighting competition in prepared food categories, 66% of retailers listed grab-and-go. This trend won’t relent soon as consumers continue to prioritize convenience and speed when shopping for food.  

At the heart of the differing areas of prepared foods is a need for technology. Technology can play a pivotal role in the production, storage, and growth of prepared foods, made-to-order food, and grab-and-go, serving as a major aid to associates in the recipe production process. If a retailer can provide the right tools to associates in their prepared food systems, they can be more available to create the freshest possible items and provide the best possible shopping experience to the consumer.  

Many grocery stores are even investing in technology solutions that offer online ordering and delivery to incorporate prepared foods into eCommerce services. Wegmans recently launched a standalone e-commerce meal delivery service via called Wegmans Meals 2GO. This pilot program lets customers order prepared foods such as sushi, pizza, wings, subs, and salads on a special app and either pick them up curbside or have them delivered if the order is $20 or more.  

The need for prepared foods will only increase as consumers crave quick, convenient, healthy, fresh meals. And not just in-person: some 40% of online sales are now being generated by fresh food departments.

For grocers, the time to nail fresh prepared foods isn’t just now—it’s yesterday.  
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Sarah Montgomery

Director of Solutions Consulting, Upshop