Profiting From Deli Prepared Foods

Here are the top trends for retailers looking to increase profits from prepared foods

Deli prepared foods was once synonymous with sandwiches; or, more historically accurate circa the late 19th century in the U.S., pastrami on rye with a side of coleslaw. Today, selections are staggering. From choices behind the glass, in grab-and-go cases and on both hot and cold bars, customers in the retail deli’s prepared foods department now enjoy a ‘kid in a candy shop’ experience with a ‘have it your way’ buffet of favorites. It’s no wonder that deli prepared foods/retail foodservice last year totaled $12.5 billion, according to the Madison, WI-headquartered International Deli Dairy Bakery Association’s (IDDBA) What’s in Store 2020

“The deli is one of the most dynamic departments in grocery,” says Nathan Roe, Sr., manager of deli strategy and customer marketing for Reser’s Fine Foods, based in Beaverton, OR. “Today’s consumers are seeking convenience and variety, as much as they are looking for quality and value. Retailers nationwide are mixing up the status quo, from delis that are expanding to demonstrate a retailer’s prepared foods expertise, to departments that are moving to packaged-only, freeing up behind-theglass labor costs.”

THREE TOP TRENDS

In prepared foods, three top trends are driving consumer demand, manufacturer innovation and the latest deli offerings. First is the plant based craze. This market is projected to reach $3.5 billion by 2026, up from $1.6 billion last year, according to the 2018-published report, Meat Substitutes Market, by Northbrook, IL-based MarketsandMarkets Inc., pushed by an interest in the health of both people and planet.“There’s anacross-the-board focus on plant-based protein today in prepared foods,” says Eric Richard, the IDDBA’s education coordinator. “Ways we may see
this translated to the deli are, for example, jackfruit in place of pulled pork in sandwiches and use of ingredients like quinoa and chickpeas in salads and sides. The key here is that interest in plant-based foods isn’t only coming from vegans and vegetarians, but also meat eaters who want to diversify their diet.”

Second is consumer interest in health and ‘clean’ eating, meaning purchasing foods with ingredient labels that read like grandma’s recipe rather than the con- tents of a chemistry lab. Sixty percent of consumers surveyed by the Ireland- headquartered, global food ingredients manufacturer, The Kerry Group, for its 2019 Clean Label Study were familiar with the term ‘clean label’, 44 percent said it was important to them and 76 percent of foodservice consumers viewed clean label foods as healthier than traditional foods.

“Consumers are more educated today than ever and are hyper aware of what foods they are consuming and the bene- fits of those foods,” says Aimee Tsakirellis, director of marketing for Cedar’s Mediterranean Foods, in Haverhill, MA. Additionally, she says, “consumers are very aware of product certifications, ingredients and how products are made.”

Third, there’s consumers’ desire for ‘something different’ often represented by globally inspired fare. Case in point is findings from the Washington, D.C.- headquartered National Restaurant Association’s (NRA) What’s Hot Culinary Forecast 2020, where trending global ethnic cuisines are those from Asian islands (Indonesian, Malaysian, Filipino, Singaporean, etc.), South American, Regional American (including Native American), Regional Chinese and Indian. 

“We’re seeing more demand for unique products and flavor profiles. For example, miso and corn chowder when it comes to soups,” says Thomas Bross III, chair- man and CEO of Winter Gardens Quality Foods, Inc., a New Oxford, PA-based pre- pared foods co-packer.

Corey Wilde, vice president of business development for Hissho Sushi, in Charlotte, NC, one of the largest pro- viders of turnkey sushi bars to locations  such as supermarkets, cafés and university dining, agrees and adds, “From our experience, shoppers want innovative, authentic flavors that are also fresh, healthy and satisfying options.

WHAT’S HOT 

Deli prepared foods is a broad category that includes meal components, such as Entrées/Prepared Meats, Sandwiches, Sides and Soups.

1. ENTRÉES AND PREPARED MEATS.

Representing nearly half (42.4 percent) of deli prepared foods/retail food- service dollars, up 2.6 percent versus a year ago, this subcategory is among the most diverse.

“Operators are more than ever struggling with consistent execution at the store level. Scarcity of labor continues to top the list of operator issues, so our prod- ucts are designed for easy preparation and serving. All our entrées are fully cooked and ready to serve, either in a hot bar or pre-packaged for grab-and-go meal sales,” says John Becker, senior director of marketing for the Sandridge Food Corp. in Medina, OH.

Becker adds that the company’s best-selling entrée is slow cooked, sous vide pot roast. Sandridge has recently introduced sous vide pork chops.

Chicken is the number one animal protein when it comes to entrées, followed by seafood, pork, turkey and beef. Blount Foods has capitalized on this with two chicken- and two beef-based entrées that come in 4-pound heat-and-serve packs ideal for hot bar service. These are Chicken & Broccoli Alfredo with Penne and Chicken with Noodles in a Marsala Wine Sauce, and Beef Stroganoff with Noodles, and Macaroni and Beef in Tomato Sauce.

“These offer a nice Italian cuisine flair, plus the sauces are essential to keeping the product moist and fresh on a hot bar,” says Bob Sewall, executive vice president of sales and marketing for Blount Fine Foods, in Fall River, MA. “One area I think we, and I mean manufacturers as well as deli operators, need to figure out is how to get information out to the hot bar customer. In traditional foodservice, there are written menus and wait staff that help describe the dishes offered.”

Turn a pack of ready-to-cook gourmet pasta into a lunch special, suggests Larry Montuori, vice president of sales for Nuovo Pasta Productions, Ltd. in Stratford, CT. “The Mediterranean diet is still trending, and deli operators can tap into this by offer- ing three of our fresh pasta raviolis, which cook in two to three minutes, with cus- tomized toppings like pesto or basil, grape tomatoes and a drizzle of olive oil. It’s a great way to rotate bagged product on the shelf. There’s the cache of a freshly-prepared made-to-order lunch, and instead of selling one bag of pasta for $6.99, operators sell three lunches for $4.99 each.”

Cheese-filled ravioli and tortellini are best sellers, Montuori says. Favorite varia- tions include Portabella and Fontina Ravioli, organic spinach and Mozzarella Ravioli and Provolone Cheese and Prosciutto Tortellini.

“Seafood has been a real sleeper. No one knew it could sell. But our products, like Crab and Lobster and Shrimp and Lobster Ravioli are in demand,” says Montuori.

Seafood meets the plant-based trend in one of the latest offerings from Hissho Sushi. Last year, the company unveiled its Spicy Pepper Roll, which is made with a plant-based ‘tuna’—a roasted bell pep- per. The company has also developed new innovative poke bowls and Dim Sum.

“To help execute these new offerings, we’ve teamed up with retail partners like Giant Food Stores to provide sushi and appetizers in their new Heirloom Market in Philadelphia’s trendy Northern Liberties neighborhood. Not only is Hissho’s hand- crafted sushi available to customers in the deli, but it’s also available in their unique tap room called ‘The Underground’, a lower-level game room that serves more than 40 craft beers plus wine, hard seltzers and kombucha,” explains Hissho Sushi’s Wilde.

Components, be it sous vide pot roast or sushi, that customers can build into a meal is key to merchandising the Entrées/ Prepared Meats segment of the prepared foods category.

Sushi and popular entrées, like Dim Sum, salads and poke bowls, are no longer reserved for special nights out at upscale restaurants but are components custom- ers can now build a meal from in the deli, according to Wilde.

“The most successful product for us has been a line of pre-paired bulk meal kit com- ponents, where protein, sauce and starch components are all shipped in one case, so operators can easily execute hot or cold meals, with 100 percent yield. Research shows consumers, particularly younger generations, are interested in snacking as a concept, thus there appears to be poten- tial for prepared meals positioned as more convenient and portable options,” says Sandridge’s Becker.

2. SANDWICHES.

 This deli staple is the fourth largest retail prepared foods segment, representing 13.6 percent of cate- gory dollars, after Entrées/Prepared Meats, Salads and Appetizers. The latest twist is in bread spreads. Good examples abound at Zingerman’s Deli in Ann Arbor, MI, which offers extras for customized sandwiches, such as hummus, avocado spread, cream cheese and pesto.

“The biggest news in the hummus category is its expansion into foodser- vice,” says John McGuckin, CEO at Tribe Mediterranean Foods, Inc., in Taunton, MA. “Panera just launched hummus as part of its grain bowl. Plus, hummus is being recognized as a healthier alternative to mayonnaise on flatbreads and sand- wiches. Some delis are putting hummus behind the glass to capitalize on these new usage occasions. To help, we’ve also come out with a 5-pound foodservice bag of hummus with a nozzle on the end that maintains the integrity of the product without dirtying spoons.” 

Savory bestsellers are classic, roasted red pepper and garlic, which collectively represent 60 percent of hummus category sales, McGuckin says.

Last fall, Santa Marie, CA-based 

Curation Foods, came out with its Yucatan Foods’-brand 14-ounce squeeze pouch of restaurant-style and authentic flavor guacamole for use as a condiment on sand- wiches, toast and burgers. 

“Clean ingredients and trending flavors like super spicy are driving sales of guaca- mole, which is becoming more of a staple condiment,” says John Trang, associate marketing manager for Yucatan Foods.

3. SIDES.

A small part of prepared foods revenues, at 3.3 percent of category dollars, and chef-driven innovation, espe- cially in hot sides, may soon grow sales. 

“Macaroni and cheese is a perfect example,” says Winter Gardens’ Bross. “It’s a classic comfort food and a high-volume item. Now we’re seeing interest in plus ver- sions with lobster or onions or vegan. Some customers offer five to six proprietary versions of macaroni and cheese.”

White Cheddar Macaroni and Cheese leads the way in side dishes for the Sandridge Food Corp., and there are varia- tions like Buffalo style.

Additions such as uncured bacon and hatch chilies are new from Blount Fine Foods. Reser’s Special Request Baked Macaroni & Cheese is sold as a baked cas- serole-like side that, when cut in portioned squares, displays beautifully in the cold case or easily repacks with proteins in deli meals for grab-and-go.

Going one step beyond, Don’s Prepared Foods introduced new sides.

“These are clean–labeled, globally-in- spired gourmet vegetarian sides that are influenced by flavors and spices from around the world,” says Carl Cappelli, senior vice president of sales and busi- ness development for the Schwenksville, PA-headquartered company.

The sides include Beets with Tahini, Braised Italian White Beans, Carrots and Chickpeas with Chermoula, Coconut Rice & Lentils, and Korean BBQ Green Beans as well as the newest Adobo Rice and Beans, Artichoke Romesco, Green Curry Lentils and Quinoa, Smoky Butter Beans, and Southwestern Black Eyes Peas.

Like the latest entrées/prepared meats and sandwich fixings, these sides embody the three top trends—plant-based, health and that ‘something different’—that is driving demand, innovation and sales of deli prepared foods today. DB