The instore deli was one of the grocery departments hit hardest by COVID. Hot bars, salad bars and other deli staples were either scaled back sharply or shut down entirely due to food safety concerns — whether, hindsight being 20/20, it was warranted or not.

But in 2021, things started to get back to normal, and the instore delis of 2022 look even more like their pre-pandemic versions.

Still, in many cases, COVID will have lasting effects on the delis of tomorrow. And trends that were kicking in even before the pandemic will continue to change the way retailers envision a department that is critical to the overall success of their stores.

In the years leading up to COVID, many retailers were making a big push to add more retail foodservice offerings in their instore delis, said Rick Stein, vice president of fresh foods for Arlington, Va.-based FMI – The Food Industry Association.

In 2019, FMI’s annual retail foodservice study reported a 8.2% year-over-growth in retail foodservice. In many of the years preceding that, growth was in the double digits, as grocery stores added more hot and salad bars, full-service restaurants and a plethora of offerings beyond the traditional fried chicken and sandwiches.

Then came the pandemic, which put an end to sales of most exposed food. How COVID was transmitted wasn’t yet clear, and consumers didn’t want to touch anything they didn’t have to — especially uncovered, ready-to-eat food.

“We saw a tremendous decline in 2020 over the previous year,” Stein said.

COVID’s impact on the deli and the fresh perimeter in general was huge, and many of its effects will be permanent, said Marjorie Proctor, senior design and marketing specialist for Conyers, Ga.-based Dover Food Retail/Hillphoenix

“The pandemic caused a ripple effect in merchandising that none of us have ever experienced. The biggest hit to the in-store deli was at the food bars and rethinking how to present and package food items with convenience and safety in mind.”

Two years-plus after the onset of the pandemic, the food bars in many instore delis have started to resemble the ones that were in place pre-COVID. But there are some notable differences, as well, Proctor said.

“We have learned so much about how to protect ourselves and others and we still see it applied with sanitizer stations positioned at the food bars, more frequent change of utensils, and keeping our distance from other shoppers.”

In addition to that, many if not most retailers increased the number of prepackaged items in their instore delis. That includes everything from small packages for single households to empty nesters and all the way up to larger family size packaging.

In the early stages of the pandemic, retailers took action to limit consumer touchpoints and congestion instore, said Andrew Moberly, director of category solutions for Stamford, Conn.-based consultancy Daymon.

  Self-service hot bars, salad bars, and some service counters were shut down in favor of pre-packaged products.

Many of these changes were short-term, though, and instore delis have returned in a big way with some lasting changes for the better, including a robust digital presence, more grab-and-go options, and a strategic shift to compete like traditional foodservice.

“In the future, we will see more retailers adopt a hybrid approach where pre-pandemic instore deli operations like service counters and self-service will play a limited but essential role in collaboration with pandemic-stimulated changes like grab-and-go and traditional foodservice with an e-commerce emphasis,” Moberly said. “We see some retailers already adopting this hybrid approach and seeing success.”


Adjustments and innovations

The pandemic also had a huge impact on the labor pool for instore deli. Deli is often an entry point for new grocery store employees, Stein said. And with entry-level positions hit disproportionately hard, retailers found themselves scrambling to find enough workers to staff delis.

To compensate, many retailers started looking for partners to help them meet their instore deli needs. Collaborations with US Foods and other foodservice leaders for central-kitchen production to supplement what retailers could do in-house became one option, Stein said.

Fortunately, with vaccinations going up, restrictions loosing and attitudes changing, 2021 saw a big jump in instore deli performance compared to 2020. It’s still up to 2019 levels, though.

“Some of those changes were permanent,” Stein said. “What we saw at the end of 2020 and the beginning of 2021 was tremendous movement to grab and go, already or partially prepared, and we saw equipment reallocated to accommodate that.”

Salad bars were reengineered to hold pre-made packaged salads. While not as easy as salad bars, hot bars have also been pressed into duty to hold packaged items.

 “Our members are reluctant to throw away expensive equipment,” Stein said.

Fortunately, many homebound consumers during COVID realized that they were more than happy to buy prepackaged instore deli foods to help relieve their increased workloads in their home kitchens. Those items began to play a central role in what Stein called “hybrid meals.”

“People had to cook at home, and they were looking for a side dish or a salad to go with it. Things like microwaveable mashed potatoes began to be really popular. Fifty-five percent of consumers said they were doing hybrid.”

Charcuterie trays, platters and other deli options have also become more popular, giving retailers a chance to compensate for income lost to lower salad bar, hot bar and other sales affected by the pandemic. And many of these changes will remain even if a day comes when COVID is in the rearview mirror for good, Stein said.

And catering. Many consumers are finding they can use their existing supermarkets for their catering needs, at a price that’s typically much more affordable than a traditional caterer, Stein said.

“People learned to eat at home and enjoy it. Yes, they’ll say they have cooking fatigue, but they’ve enjoyed getting families together. Nostalgia is very popular right now. In times of stress nostalgia really calms you.”

Americans also got used to spending less money on food. Inflation is affecting food prices everywhere, but as Stein points out, it’s still a lot cheaper to eat at home than in a restaurant.

“The first time you go back to a restaurant, you look at the check and think, ‘I can feed my whole family for the cost of one person here,’” he said.

People with restaurant sticker shock will increasingly look to retail foodservice to find more affordable options for their “hybrid” dinners and other needs, and retailers would do well to diversify their options as much as possible, Stein said.