In the battle for consumers’ prepared food dollars, supermarket chains have shifted their marketing focus – and dollars – to products where there is less intense restaurant competition, a Datassential analysis shows.

In 2019 and 2020, the number of promotions for prepared food including prepared entrees from rotisserie chicken to sushi and sandwiches were relatively equal between restaurants and supermarkets.

However, supermarkets began pulling back in 2021, the height of the pandemic, and the difference in the two segments became stark, fast: By February of this year, restaurant promotional activity was three times that of supermarkets, based on Datassential’s monthly promotional tracking of the top 250 foodservice chains, including the top 35 supermarkets.

The shift away from head-to-head competition

Supermarkets have pulled back on promoting pizza in recent years, and now it’s promoted as often as sushi among supermarkets. In contrast, pizza promotional activity by restaurant chains rose 27% over the same period. Restaurant chains now promote pizza at a 4-to-1 rate versus supermarket chains.

The competition in this segment is especially fierce, as supermarkets compete with both chain and independent restaurants. And there is a huge number of small chain and independent restaurants that provide additional competitive offers. There are over 75,000 pizza restaurant locations across the U.S., representing one of the most popular cuisine types in the restaurant industry.

Sandwiches, the second most promoted category at supermarkets, also face stiff competition from restaurants.

Focusing on chains that offer sandwiches that are most similar to what supermarket deli/prepared food sections tee up, five national chains – Subway, Panera, Jimmy John’s, Jersey Mike’s and Firehouse Subs – and two regional chains that have modest pockets of strength throughout the U.S. – McAllister’s and Potbelly, these seven chains have almost 30,000 locations across the US. When it comes to promotions, the two sectors promote at a relatively equal rate.

Sandwiches play a critical role for supermarkets, accounting for 20% of the prepared food promotions by supermarket chains. Rounding out the top five featured product categories, sushi and pot pies promoted almost as often as pizza.

Product mix shifts dramatically

In just over 4 years, supermarket chains have shifted their promotional activity, focusing much greater attention on chicken, pot pies and sushi.

• Sushi’s share of promotional activity catapulted to 5%, more than doubling its share in 2019. Similarly, pot pies share of promotional activity rose to 4%, growing more than 60%.
• Chicken’s share jumped 10 points to 44%, by far and away, the most featured prepared food at supermarket chains.

The relative rise of sushi and pot pies as favored promotional products of supermarket chains, while a bit unusual, is easier to understand when you consider consumers’ love for them and the preparation complexity.

• Pot pies are loved by consumers – 65% of consumers love or like pot pies, according to Datassential’s consumer affinity tool. They are not easy to prepare at home and are menued by very few restaurants (less than 3% of restaurant brands have them on their menu.) And they are rarely promoted by restaurant chains.
• While sushi can be found at a variety of restaurants, it is primarily found at Japanese restaurants. There are just over 20,000 Japanese restaurants in the U.S. and just over 5,000 of those are limited-service restaurants where take-out and delivery are primary service segments. With sushi, Supermarkets have found a product that is difficult to prepare, growing in popularity and has very limited distribution…a formula that is not too different from fried chicken and pot pies.

Chicken wars stronghold

While restaurant chains are extremely active promoting chicken products, the majority of that activity is focused on chicken sandwiches and chicken nuggets or strips. Supermarket chains, by contrast, focus heavily on bone-in fried and rotisserie chicken, where there is much less direct competition from restaurants. KFC and Popeyes are the only national competition in this area while Church’s, Bojangles, El Pollo Loco and Bojangles provide competitive pressure in certain regional pockets throughout the US.

Combined these six restaurant chains, with roughly 9,000 locations across the U.S., are greatly out-promoted by supermarket chains that feature bone-in chicken. Supermarket chains promote their chicken products at a rate that is more than four times that of the six restaurant chains.

The supermarket deli has long been in the business of offering consumers foods that they love and are difficult or time-consuming to prepare, ranging from salad varieties to cakes and pies to rotisserie/fried chicken, and now sushi and pot pies, are all items that are seldom prepared. With supermarkets shift in promotional focus, these products are now convenient, nearby meal options for consumers.

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Author: Dave Jenkins, Chief Business Officer at Datassential. 

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