Today, the grocery deli and prepared foods counter is tied as the number one driver of store traffic, cited by 56% of retailers. 70% of shoppers buy deli-prepared foods at least once a month, 33% buy weekly, and prepared foods are projected to be an 8% sales growth driver in 2026. The deli foodservice category alone generated $19.6 billion in sales in 2025, up 3.7% year over year. And 97% of grocery executives say scaling their perimeter businesses is extremely or very important over the next five years.
The opportunity is real. The challenge, as most operators know firsthand, is execution.
Grocery foodservice isn't an emerging category anymore. It's a $52.1 billion industry, and it's winning share from restaurants in ways that look increasingly permanent.
Three compounding forces are driving this shift.
First, economics: 43% of consumers cut restaurant trips before any other discretionary spending, and 40% plan to eat out less regardless of budget pressure. That's not a short-term recession behavior, it's a structural reallocation.
Second, the way people cook is changing. 53% of dinners are now hybrid, mixing made-from-scratch with prepared elements. The perimeter counter owns that prepared half of the plate.
Third, demographics favor growth: hybrid workers and households with children are the heaviest deli-prepared users at 62% each, and 40% of hybrid workers plan to buy more in the coming year.
The result? Fresh-format chains are already seeing foot traffic grow by up to 7.7%, more than double the 3.1% at traditional grocers. Deli-prepared foods have become a persistent draw, one that even online shoppers cite as a reason to visit the store in person.
And yet: only 20% of retailers have a fully integrated omnichannel strategy for perimeter growth. The majority are still developing, early-stage, or without a plan altogether. That gap between market conditions and operational readiness is exactly where the revenue is being lost — up to 10% of deli and foodservice sales annually, according to industry research.
The grocers closing that gap aren't doing it by working harder. They're doing it by working differently — building systems rather than fighting daily fires.
Before we talk about what winning looks like, it's worth naming what's actually getting in the way. Operators face four persistent challenges: staffing, training costs, knowledge gaps, and manual ordering processes.
Staffing is the top issue. Labor is the number one challenge in grocery retail, and 38% of grocers specifically name staff and training concerns as their biggest barrier to expanding prepared food services. High turnover in fresh departments directly limits a grocer's ability to maintain quality, let alone grow.
Training costs compound the problem. When grocers do find the right staff, onboarding costs exceed $600 per employee — and 50% of retailers expect those costs to keep rising.
Knowledge gaps are perhaps the most insidious challenge. Fresh departments run on institutional knowledge that rarely gets documented. When tenured team members leave, their expertise goes with them. And 42% of consumers say knowledgeable staff is an important store characteristic making these departures a direct customer experience issue, not just an HR problem.
Director of eCommerce and Loyalty at Harmons Grocery Spencer van den Eikhof frames it well:
"The advice I'd give another retailer who is looking to launch a foodservice program in 2026 is treat it like a true operational program, not just another department. It takes strong leadership, consistent execution, and systems that support the complexity behind the scenes. As demand grows for prepared meals, catering, and special orders, having the right technology and the operational processes to support that technology becomes increasingly important."
Manual ordering processes round out the list. Many perimeter counters still take orders by hand, which is an analog approach that limits cross-department coordination, drives errors, and consumes 15-20% of staff time that could otherwise go toward preparation, quality, and service.
Even when retailers recognize they need to modernize, the path isn't frictionless. Grocers cite team training on new software (37%) and integration and maintenance (34%) as top barriers to technology adoption. The solution isn't a one-size-fits-all tool or a one-time training — it's an integrated order management system that connects operations, technology, and team capabilities across every perimeter department.
The Foodservice Flywheel is a four-pillar framework designed to help grocers build perimeter programs that compound over time rather than plateau. Each pillar is valuable on its own. But the real leverage comes from how they reinforce each other.
Pillar 1 — Expanded Reach: A strong foodservice program gives customers a new reason to choose your store. Consumers turn to deli-prepared meals for everything from a quick lunch (35%) and avoiding cooking on weeknights (34%) to trying something new (27%) and saving money vs. a restaurant (25%). When your perimeter delivers on those occasions consistently, it changes the store's role in a customer's life — from "where I buy groceries" to "my go-to for meals." Fresh-format chains executing this well are seeing foot traffic growth of up to 7.7%, more than double the growth rate at traditional grocers. The perimeter counter isn't just a department. It's a traffic driver and a brand-building vehicle.
Pillar 2 — Customer Experience: Getting customers in the door is step one. Keeping them coming back requires a digital experience that matches how they already shop. 66% of consumers want online menus, 62% want advance ordering, and 58% want a dedicated pre-order pickup station. Grocery retailer apps with personalized discounts and recommendations are cited by 47% of consumers as the most valuable smartphone feature they use while shopping. Retailers who deliver on digital discovery turn first-time buyers into weekly regulars.
Coborn's saw this firsthand after implementing FoodStorm:
"FoodStorm has made our guest experience much simpler. It gave our guests a streamlined ordering process that we did not have with our previous program, and we saw an increase in orders year over year."
Pillar 3 — Team Member Experience: Your customer experience can only be as good as the team delivering it. Right now, many grocers are asking their teams to execute increasingly complex programs with analog tools that can't keep up. That gap creates errors, drives turnover, and erodes the service quality customers expect. Digitizing workflows changes this: an order management system guides teams across departments — what to do, when, and in coordination with other counters — removing friction and freeing staff to focus on food quality and customer interaction. The results are measurable. Forty-six percent of grocers report faster service after digitization, and 43% report improved order accuracy.
Chase Christiansen, Director of IT & Ecommerce at Kowalski's Markets, describes the operational shift:
"Implementing the FoodStorm order management system (OMS) and kitchen display system (KDS) enabled us to eliminate paper ordering at our prepared foods counters. This helped streamline our ordering process, reduce ordering mistakes, and has resulted in great feedback from customers."
Pillar 4 — Business Insights: Orders placed through manual processes disappear the moment they're fulfilled. There's no record of what sold, when, or why. Every digitized order, by contrast, is a data point. Over time, that data reveals which items drive repeat visits, when demand peaks, where shrinkage is happening, and what the next menu opportunity looks like. Last year, grocers' use of loyalty card data for customer engagement jumped 18 points to 69%. And yet only 31% of grocers have translated their ordering data into meaningful, data-driven insights. That's the gap Pillar 4 is built to close — because it puts real intelligence at the front of the next rotation of the flywheel.
The connective tissue that makes the flywheel turn is a purpose-built order management system — one designed for the specific complexity of grocery foodservice, not adapted from a general ecommerce platform. FoodStorm sits at the center of that architecture, managing orders, production, analytics, and customer experience across every channel an order enters: online via Storefront Pro, third-party through the Instacart App, and in-store via kiosks, QR codes, and kitchen display systems.
That integration matters because the channel mix consumers expect is real. Operators cite the most important ordering channels as an online app or website (62%), in-store kiosks or tablets (58%), and third-party apps like Instacart (44%). Covering all three isn't optional — and getting it right delivers results quickly.
Mark Bramhall, Vice President of Deli at Sprouts, speaks to why the right platform fit matters as much as the technology itself:
"Prepared foods continue to grow as customers seek convenient, better-for-you meal options that offer real value. For retailers entering the space, the key is designing a program that's intuitive for customers and easy for stores to execute. FoodStorm was the right fit for us because it supports that streamlined approach and integrates seamlessly with our broader technology ecosystem."
Sprouts uses FoodStorm to manage holiday catering rushes, run its made-to-order sandwich program, and coordinate across online ordering, in-store kiosks, pickup management, weight reconciliation, and kitchen display systems for production. It's the full flywheel, in motion.
Implementing the flywheel doesn't require doing everything at once. The framework is designed to meet retailers where they are, with each tier delivering real value while propelling them toward the complete system.
Tier 1 — Starting Out is for retailers still running largely analog operations. The priority is establishing a digital ordering channel and digital order production for at least one high-volume counter — the deli or bakery is a natural starting point. The technology focus: a cloud-based OMS with unified order management and existing POS integration, paired with a kitchen display system for counter teams. The team focus: designate a department champion to own the tech, and invest in structured onboarding rather than informal training. The 90-day milestone: first digitized counter live, with baseline metrics established for order volume, accuracy, and labor efficiency. You now have data where you had none before.
Tier 2 — Scaling Up is for retailers who have digitized one or two counters but are running them inconsistently. The priority is expanding digital ordering to additional perimeter counters and layering in upselling and meal bundling on the online menu. The technology focus: add kiosk or QR code ordering in-store, deploy kitchen display systems at every digitized counter, and connect loyalty programs to the OMS for targeted, trackable promotions. The team focus: standardize production workflows across departments and start using OMS data to improve scheduling. The 90-day milestone: multi-counter digital ordering live, first loyalty-integrated promotion executed, and measurable improvement in order accuracy.
Tier 3 — Optimizing is for retailers with digital infrastructure in place who are ready to focus on compounding returns. The priority is using operational data to drive menu innovation, reduce shrinkage, and optimize labor. The technology focus: activate a full analytics dashboard with predictive inventory and demand forecasting, and expand to omnichannel promotion across in-app, in-store, and social channels. The team focus: move from reactive management to data-driven planning, and share performance dashboards with department leaders. The 90-day milestone: measurable reduction in shrink, at least one data-informed menu decision made and tracked, and the next perimeter growth opportunity identified.
Three variables consistently determine how fast the flywheel builds momentum regardless of starting tier: knowing your peak sales window (68% of foodservice purchases happen before 5 p.m., so build your pilot around your own peak), building health-forward options in from the start (78% of consumers actively try to make healthy choices, and 23% want more nutritious deli options), and planning the marketing layer early rather than waiting for operations to feel "ready" (65% of consumers say social media has at least some influence on their deli-prepared purchases).
As Rob Hill, General Manager of Order Ahead at Instacart, puts it plainly:
"By 2027, customers will have established new shopping patterns. The window to capture this growth is now."
Ninety-three percent of grocery industry leaders agree their companies need to increase or optimize prepared food services. The market conditions for grocery foodservice couldn't be more favorable. The question isn't whether your perimeter deserves more investment — it's where you are in the roadmap and when you take the next step.
The grocers winning on the perimeter right now started somewhere. Choose your tier, follow the roadmap, and let each rotation compound. The flywheel doesn't build overnight — but it does build.
Ready to start your Foodservice Flywheel?
Download the full white paper here or talk to a FoodStorm specialist.