McDonald’s Top French Fry Supplier Lays Off 500 After Fry Demand Slips
America is the curry additionally tightens the patrons, and the impact is clearly felt in North America’s largest french fry maker Lamb Weston. So the company is now laying off employees and closing national plants in response to Americans eschewing fast food, particularly fries.
Lamb Weston Cuts 428 Jobs Due To Shrinking Demand
Lamb Weston produces billions of pounds of frozen potato products annually and said it was laying off 4% of its workforce, or 428 workers. Only 5% of the company’s total capacity is at its Connell plant, which is being shuttered close to a year after production resumed following coronavirus disruptions. Action is response to dwindling sales in fast food market and shift in consumer spending
Traffic at Fast Food Chains Is Falling but French Fries Could Save Them
Lamb Weston CEO Tom Werner said the company’s weakness was largely driven by reduced traffic at quick-service burger chains, including a 3% decrease in the first quarter at McDonald’s. Restaurant traffic in total declined 2% from a year ago. Value meal deals have enticed some customers, but fry sales haven’t rebounded as much as we expected with many consumers choosing to buy smaller portions to save.
Higher Prices Bruise McDonald’s
The cost of items away from home — a broad category that includes fast food — has increased 2.8%, and menu prices have jumped at McDonald’s, Lamb Weston’s biggest customer, as well as other fast-food chains. For many Americans, fast-food is quickly becoming a luxury thanks to inflation. Despite offering such deals as the $5 Meal Deal, sales remain soft. Last quarter, McDonald’s suffered a 1% drop in same-store sales. Wendy’s and Burger King also rolled out similar promotions with mixed results, as the fast-food giants struggle to entice diners.
Business Insider French fries are an economic indicator.
Ultimately, french fry sales are a bellwether of the economy, according to Werner. Fries, when times are tough and patrons have to tighten their belts a bit, often find themselves left off orders. Instead, fries are the first product to pedal in times of economic health. While the fry attachment rate improved to 24% in 2022, that company continues to face headwinds as fast-food restaurants in particular grapple with the prolonged economic troubles of the Never Normal economy.
Lamb Weston and Fast Food Opportunities Going Forward
Lamb Weston said it was implementing measures to manage capacity utilization and lower operating costs. The firm, however anticipates frozen potato product demand to remain depressed for entirety of fiscal 2025. The road ahead is less predictable for McDonald’s and its peers in the fast-food space, as inflation cools down.
Conclusion:
Indeed, the layoffs and the plant closing also underscored broader woes in the fast-food space industry as consumers wrestle with rising prices. While promotional deals may be pushing some customers into restaurants, the demand for fries remains sluggish and is weighing on top suppliers.
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