Fresh, convenient, healthy — for many co-ops, deli is at the heart of their business. It’s a department that attracts daily visits from regulars and welcomes new shoppers, allowing co-ops to expand their reach. While aisles of unfamiliar products might be intimidating to new shoppers, coming in for a pre-work muffin and cup of coffee or a quick lunch is an easy way to get to know the co-op.

For most co-ops, the arrival of the pandemic halted deli operations. Most co-ops ceased self-serve hot and salad bar operations, but with restaurants closed, more customers were cooking from home, and the co-op saw deli sales shift to other departments. Now, with vaccinations underway, restaurants are reopening, and customers eager to cook less from home will increasingly seek out alternatives. We stand to lose some of the sales we gained from increased food-from-home consumption during the pandemic, and many co-op delis continue to offer limited options to shoppers or even remain closed, leaving shoppers to look elsewhere.

Complicating the matter: Our competitors used the pandemic to retool their deli offerings, filling cases with meal solutions for a range of family sizes and dietary preferences. For example, Kroger noted in their Q4 2020 earnings call: “As customers look for food inspiration, we continue to develop innovative products to meet their needs, including ready-to-heat and ready-to-eat foods. We have seen significant growth in deli, bakery and meal solution, and Home Chef finished the year with record sales, capturing additional share of stomach from restaurants and grocery retailers.”

What’s Next for Co-op Delis?

Now is an excellent time for retail food co-ops to focus on deli programs and execution. What can we do to rethink and rebuild deli business? How can we position ourselves to attract customers who are venturing out more and eager to try something new? What are our opportunities and challenges?

Some co-ops will be able to reopen self-serve hot and salad bars. In fact, Ever’man Cooperative Grocery & café, Pensacola, Fla.,and Ashland Food Co-op in Oregon have already done so. While this won’t work for co-ops in all markets, we encourage managers to evaluate this themselves before ruling out the possibility.

For other co-ops, the key may be to introduce new grab and go offerings or prepared food services. For example, on a recent quarterly deli call, the deli manager from Monadnock Food Co-op, Keene, N.H., shared information about their protein bowl program. Following the call, the deli manager from Roanoke Co+op in Virginia adopted the program in their deli — with fantastic results. They offer four varieties of bowls and are currently selling between 12 and 15 bowls a day, or 80 to 110 per week. Roanoke Co+op, like several other co-ops, shifted from hot table to full service. Others are replacing hot tables with bistro-style programs. Roanoke Co+op is also implementing a pizza program, and several co-ops, including Monadnock and Community Co-op Market in Tallahassee, Fla., are developing or considering a smoked meat program in deli.

What Are Customers Saying?

Beyond simply reopening delis for business, we can also look at what customers tell us about deli service at our co-ops. Currently, among CX Survey Program participants, only 57% of shoppers report they are highly satisfied with their deli experience. This might not sound bad, considering the number of services that have been shut down, but we saw low scores prior to the pandemic — January and February of 2020 were 55% and 56%, respectively, and at our top-performing delis only 64% of shoppers are highly satisfied — suggesting the deli experience is an opportunity for co-ops even without consideration to the pandemic.

Interestingly, customers reported increased satisfaction in taste of prepared foods products in May 2020. Deli departments should ask what was different about deli operations last May that may have contributed to this trend. Still, the customer comments suggest opportunities for improvement:

“It would be lovely if the deli had more bowl options in addition to the teriyaki bowls such as rice or quinoa with sautéed meat and veggies, with the option of different sauces. Or a garden salad with cut meat on top with the option of dressing.”

“Go to [other local grocers] to see really vibrant exciting prepared salads look like, and buy a few to taste them… Also, they are often less expensive.”

“I’d like to see more of a selection in the prepared foods deli section. The current selection is very carb heavy (pasta salads, mashed potatoes, sandwiches, etc.) or vegan, and it’s lacking in lower carb grab-and-go options.”

“I would love to see more variety in the prepared foods. My family buys the prepared food all the time but we are beginning to get tired of them…”

Taste and variety matter to our shoppers, and so too does high availability of those products. CX Survey scores indicate significant opportunity to improve product availability throughout our stores, especially in bakery and prepared foods departments. For most co-op delis, the day starts strong, and product availability scores decline steadily after lunch and into the evening. Customer comments echo this: “…the shelves were pretty bare, the deli wasn’t stocked yet or they had run through it by 1pm.” Co-ops that are expanding deli offerings might consider a slow expansion of products to ensure that production is sufficient to maintain stock throughout the day and ensure high quality and great taste.

It’s Always Time to Innovate

It’s clear there was an opportunity to innovate in prepared foods even prior to the pandemic. Now with a light on the horizon, the need is even greater to reconsider our programming, test new concepts and deliver products with a focus on quality and taste. By focusing on doing a handful of new things really well — and keeping product available throughout the day — we might be able to improve customer satisfaction and appeal to potential new shoppers at the same time.

If your co-op is interested in taking a closer look at deli, you don’t need to start from scratch. NCG created a useful guide called Next Steps for Prepared Foods. This document can get you started on many of the deli programs covered here, including protein bowls and smoked meats. Review the document with your team, and reach out to your regional Retail Support team for additional support.