Profit at the Perimeter: Which Fresh Department Delivers the Highest ROI?

Margins in grocery are traditionally slim. In 2024, the average grocery profit margin was just 1.6%, leaving little room for error. While packaged goods drive volume in the center store, it’s the perimeter departments — including deli, bakery, and floral — that consistently deliver the highest ROI.

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The Perimeter Advantage

Fresh departments are no longer just supporting categories — they are the profit engines of modern grocery. According to FMI State of Fresh Foods 2024 report, perimeter sales in the U.S. hit $271.3 billion in 2023, with bakery and deli leading growth

• Bakery: +6.7% year over year ($44.8B)
• Deli: +4% year over year ($47.8B)
• Produce: +2.2% year over year ($81.3B)
• Floral: +6.5% year over year ($9.1B, Circana/IFPA)
  

In contrast to center-store packaged goods with margins of about 1–3%, perimeter categories consistently yield stronger returns.

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Deli: Everyday Profitability

The deli remains one of the most reliable ROI drivers. Margins typically range between 20–40%, and frequent purchases ensure it remains a dependable revenue stream.

• Weighted items, such as turkeys, seafood, and sliced meats command premium pricing.
• Catering trays extend deli sales into larger, higher-margin orders.
• Upsell opportunities, such as sides and sauces, help boost average basket size.
  

FoodStorm enables delis to manage weighted items seamlessly, digitize special requests, and centralize orders across in-store ordering kiosks, Caper Carts, Instacart App and e-commerce storefronts, and service counters.

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Bakery: Seasonal & Custom Growth

Perimeter bakery is outperforming center-store bakery. In 2024, fresh bakery sales rose 1.2% to $21.4B, while center-store bakery sales declined (210 Analytics). Top performers included croissants (+6.6%), donuts (+6.5%), and muffins (+3.2%). 

Customization and seasonality are key drivers of bakery ROI:

• Custom cakes drive repeat, high-margin sales.
• Holidays contribute up to 40% of annual bakery sales.
• Everyday categories like cookies and pastries provide steady growth.
  

FoodStorm streamlines complex bakery operations with dynamic pricing for custom orders, real-time KDS integrations, and instant menu publishing.

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Floral: Small but Mighty Margins

While floral departments represent just 1.3% of total store sales, they deliver some of the  highest gross margins in grocery — averaging 46% (FMI/IFPA).

• Annual supermarket floral sales reached $9.1B in 2024, up 6.5% year over year.
• Nearly half of sales are attributed to non-calendar events, such as everyday celebrations and impulse purchases.
• High-margin impulse buys, especially when bundled with bakery or catering, can significantly boost basket size.
  

FoodStorm empowers retailers to sell florals online, provide customizable bouquets, and bundle products across bakery and deli to enhance customer value.

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How FoodStorm Maximizes ROI at the Perimeter

Deli, bakery, and floral each contribute unique profitability. Together, they form the foundation of perimeter ROI — and FoodStorm helps grocers capture the full opportunity.

• Omnichannel ordering centralizes sales across online, Instacart app, in-store kiosk, Caper Carts, and service counters.
• Order management tools like kitchen display system, production logs, and menu management streamline operations.
• Upselling and bundling features encourage premium items and cross-department add-ons.
• Customer marketing tools support loyalty programs, cart recovery, and targeted promotions.
• Integrations with POS, accounting, and delivery reduce admin work and errors.
  

Grocers using FoodStorm report double-digit growth in catering and holiday orders, alongside significant annual savings from automation and improved efficiency.

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The Bottom Line

Center store may drive stability, but the perimeter delivers profitability.

• Deli drives everyday revenue and flexibility.
• Bakery fuels seasonal peaks and custom growth.
• Floral generates high margins and boosts basket size.
  

With FoodStorm, grocers can maximize ROI across all fresh departments, streamline operations, and deliver seamless experiences to their customers.

Book a demo today to learn how FoodStorm can help maximize your perimeter profitability.

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Sources:

https://www.deloitte.com/us/en/insights/industry/retail-distribution/future-of-fresh-food-sales-consumer-demand-strategies.html

https://progressivegrocer.com/retailers-weigh-priority-fresh-foods

https://www.bakingbusiness.com/articles/63068-perimeter-helps-bakery-sales-finish-on-upside-for-2024

https://www.simberobotics.com/resources/insights/fresh-is-physical-retail-s-power-category-now-more-than-ever

https://foodinstitute.com/focus/fresh-bakery-positioned-for-growth-through-differentiation/

https://foodmix.net/the-dynamic-fresh-food-frontier/

https://www.circana.com/industries/perimeter-store-and-fresh-foods

https://www.foodbusinessnews.net/articles/26364-bakery-sees-highest-food-retail-perimeter-sales-growth-last-year

https://www.supermarketperimeter.com/articles/13032-perimeter-baked-goods-outperform-center-aisles

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