This is the first in a series of articles looking at prepared foods and meal solutions at grocery stores.
The sizzle of stir fry, the scent of wood-fired pizza and the vibrant colors of a crisp salad bar have become main attractions inside grocery stores as retailers revamp their meal solutions and draw more shoppers.
According to research from IRI, nearly 80% of U.S. consumers made a purchase from the deli prepared foods department in 2018, generating more than $12.5 billion in sales. The prepared foods section offers a sensory experience that drives impulse purchases, but as online grocery shopping becomes more habitual, customers also want to add their favorite prepared items to their delivery or pickup order.
For many shoppers, that’s not possible yet. As both prepared food offerings and online grocery purchasing evolve and more customers want quick meal solutions, retailers are trying to figure out how, or if, they should incorporate meal delivery into e-commerce.
"This is a real tough one for many operationally," Bob Goldin, partner and co-founder at retail firm Pentallect, told Grocery Dive. "I’d say don’t jump into it unless you’re pretty confident it’s going to be additive to your business."
At most stores, prepared foods available for online ordering are limited to heat-and-eat meals and grab-and-go prepared foods — think packaged pasta salads, ready-to-bake pizzas, rotisserie chickens and pre-portioned dinners from the deli. Items from self-serve hot bars, wok stations, made-to-order salads and other freshly prepared selections are a little more complicated.
Pioneering prepared food delivery
Some grocers are ready to test delivery for made-to-order prepared foods. Grocery delivery company Shipt told Grocery Dive that several of its partners are adding foodservice items online.
"Many of Shipt’s grocery partners including Costco, H-E-B [and] Meijer offer prepared foods including hot food bars, salad bars and deli sandwiches," Julie Coop, a spokesperson for Shipt, said in an email to Grocery Dive. "In some cases, our grocery partners support prepared foods in the Shipt catalog, and in some cases they do not."
If a retailer doesn’t offer prepared foods through Shipt, Coop said that Shipt members can put in special requests through the app and describe a prepared food item for their shopper. The Shipt shopper will then fulfill the order request in-person and include it in a customer's grocery delivery.
In April, Wegmans launched a standalone e-commerce meal delivery service via called Wegmans Meals 2GO. The service — which is being piloted at two stores in New York and Virginia and will expand to 40 stores by the end of the year — allows customers to order any of Wegmans’ prepared foods through the Wegmans Meals 2GO app, from sushi and pizza to wings, subs, salads and items from the hot wokery. Delivery is only available for orders of $20 or more, but customers can choose curbside pickup for smaller orders.
To fulfill these food deliveries, Wegmans has partnered with food delivery service DoorDash, which offers a white label fulfillment platform for both grocers and restaurants.
"Orders are made to order and packaged by a Wegmans employee. Dashers then pick up the order and deliver directly to customers’ homes," said Casey North, DoorDash’s vice president of Drive, in an email to Grocery Dive.
Publix also offers its famous pub subs and a variety of hot foods for grocery delivery. Publix spokesperson Maria Brous said the grocery company began offering prepared foods for delivery about a year ago. The grocer allows its customers to select prepared foods online from the grab-and-go section, deli hot case, sub station and sushi counter.
"We strive to meet our customers where they are and wanted to provide the convenience of offering prepared foods for pickup or delivery," Brous said, noting that quality is also a key benefit of the offering online, which is available through Publix delivery or pickup services.
A Publix employee prepares and packages online food orders and provides them to the Instacart shopper for delivery, Brous said. Orders are subject to Instacart’s delivery fees, which are $3.99 for orders of $35 or more, or free for Instacart Express members who pay a $99 annual fee or $9.99 per month.
When it comes to offering made-to-order foods for delivery, proper handling is an important component to customer satisfaction.
"Shipt shoppers are equipped with the resources and tips on how to deliver hot and cold items, ensuring they are correctly packed for delivery," Coop said.
She said Shipt shoppers use safe storage techniques, like storing hot and cold items in separate insulated bags during the shop and during delivery. Shoppers also load hot and cold items in the passenger compartment of cars for better temperature control during delivery.
For Wegmans, choosing a fulfillment partner with expertise in restaurant meal delivery and the logistics around it was an important part of its offering so the quality of food could reflect what customers expect in stores, North said.
Meal delivery may not be for every grocer
The ability to order a favorite prepared meal for delivery is a useful option for customers who are familiar with a specific grocer and know what to order. But that isn’t always the case.
"So many retailers have such a broad selection and it’s so impulse-driven," Goldin said, noting that the sights, smells and design of the prepared foods sections are a big part of its appeal that may not translate to online ordering.
Another issue Goldin sees is the ability to customize portion sizes, which can become more limited when ordering online. With the growth in prepared food selections, Goldin noted that retailers could have as many as 30 to 40 SKUs in the department, as well as adjacent sections like olive bars — and that variety complicates retailers' ability to bring prepared foods online.
"It’s certainly not as e-commerce friendly as ordering a standard grocery item," Goldin said. "When it’s a prepared food that’s so dependent on eye appeal, merchandisability, customization … it does present some operational challenges."
It may be worthwhile for retailers to figure out how to add delivery, however. The Food Marketing Institute’s Power of Foodservice report for 2018 shows that grocery prepared foods are not top of mind when shoppers are considering "what’s for dinner." Only 35% of Americans usually know what’s for dinner two hours before mealtime, but only 15% frequently consider retail foodservice if they are unsure, the report found.
"For selected grocers, it probably makes sense. Wegmans certainly is one of those. They have a passionate following, they really know what they’re doing, they execute well. Will it work? It may. I’m not 100% sold."
Partner and co-founder, Pentallect
Instead, consumers turn to restaurant delivery, which is widely available through apps and online ordering at this point. Wegmans' foray into meal delivery is strikingly similar to restaurant delivery, reflecting intensifying competition between restaurants and grocers.
For now, restaurants are way ahead of retailers when it comes to meal delivery. They are doing it better, faster and on a much broader scale. According to a survey by the National Restaurant Association, 38% of adults — and 50% of millennials — say they're more likely to order restaurant delivery now compared to two years ago.
But if grocers can expand their delivery options to include prepared foods — particularly if they are easy to order through a service like Wegmans Meals 2GO, there could be a substantial opportunity to boost sales and win business back from restaurants. It's also notable that companies like DoorDash are willing to serve both restaurant and retail partners.
Goldin said that meal delivery for grocery prepared foods may work best for a few grocers with a loyal following, but that it is not viable for a lot of grocery chains. From customer satisfaction to economics to the logistical challenges it presents for grocers, there’s no guarantee that it will be worth the investment.
"For selected grocers, it probably makes sense. Wegmans certainly is one of those,” Goldin said. "They have a passionate following, they really know what they’re doing, they execute well. Will it work? It may. I’m not 100% sold."