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The Future of the Deli: prepared foods are in position to prosper, but innovative merchandising, quality and convenience remain keys for success.

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It is a fine time to be a supermarket deli. With the slowdown in consumer spending resulting in declining restaurant activity, delis are in a position to experience a sales bonanza from convenience--and cost-minded--meal seekers.

Indeed, Technomic Inc., a Chicago-based food industry research firm, forecasts negative 2.2 percent growth for the restaurant industry in 2009, including negative 6 percent growth for full-service locations.

Technomic reports that it will be the worst year for foodservice since it began tracking performance in 1972.

A 2008 Technomic survey also found that 74 percent of consumers are likely to less-often visit both quick- and full-service restaurants.

In addition, more than 50 percent of consumers--including more than 70 percent of higher-income persons--plan to spend less when they do visit either type of restaurant.

"Delis are the perfect outlets to serve time-starved customers who also are looking for an economical meal," says Richard George, professor of Food Marketing at St. Joseph's University in Philadelphia. "People who used to visit restaurants still want delicious food that they don't have to cook themselves."

To position the deli as a dinner destination, George recommends that retailers create displays that contain various meal elements, including entrees, side dishes and desserts.

Such initiatives can include co-merchandising ventures with other store departments, including bakery and wine.

Stores also can generate more attention for their prepared meals by displaying the items on end caps and featuring them in weekly advertising circulars, George says.

"There is a need to change the ways shoppers view the deli as a source of meals and the only limit is our vision and imagination," he states. "The deli is a high-margin jewel."

While the potential for generating large revenues...

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