In a surprising turn of events, a key supplier of McDonald’s beloved french fries has taken drastic measures, shutting down a factory and cutting jobs due to a significant downturn in fast-food demand. With customers increasingly pinching pennies, the fast-food landscape is shifting, leaving suppliers like Lamb Weston scrambling to adapt.
A Shift in Consumer Spending
As inflation continues to strain budgets, many fast-food aficionados are opting for smaller meals or skipping sides altogether. This trend has prompted McDonald’s to introduce its $5 Meal Deal, which includes a McDouble or McChicken, a four-piece nugget, small fries, and a small drink. While this initiative aims to attract budget-conscious diners, it has unintentionally led to a decline in overall french fry demand.
Tom Werner, CEO of Lamb Weston, noted the impact: “Many of these promotional meal deals have consumers trading down from a medium fry to a small fry.” With approximately 80% of fast-food fries in the US supplied by Lamb Weston, this trend is a troubling sign for the company.
The Impact of Inflation
As inflation-weary consumers opt to dine at home, fast-food sales have suffered. In California, where a $20 minimum wage for fast-food workers was implemented, prices have surged even higher, compelling diners to rethink their fast-food habits. McDonald’s reported a 0.7% decline in same-store sales last quarter compared to the previous year—an alarming statistic for a company synonymous with quick-service dining.
Lamb Weston’s Struggles
The repercussions for Lamb Weston are severe. Despite also serving higher-end restaurants and grocery stores, the company is heavily reliant on its fast-food clientele. Recent challenges have led to a staggering 35% drop in Lamb Weston’s shares this year alone.
In a recent earnings call, Werner expressed concerns about the softening demand, stating, “Restaurant traffic and frozen potato demand, relative to supply, continue to be soft, and we believe it will remain soft through the remainder of fiscal 2025.” To navigate this difficult landscape, Lamb Weston has decided to cut 4% of its global workforce and curtail production, closing a plant in Connell, Washington, and resulting in the loss of 375 jobs.
A Look Ahead
The future remains uncertain as the fast-food industry adapts to changing consumer behaviors and economic pressures. Lamb Weston’s recent decisions aim to stabilize factory operations and address the supply-demand imbalance in North America. As the fries continue to fly off the shelves—albeit in smaller portions—the iconic side dish faces a challenging road ahead in this evolving culinary landscape.
ALSO READ: Senator Accuses Trump Of Manipulating FBI Investigation Of Justice Brett Kavanaugh
