Americans are starting to turn away from fast food, and that’s sending shockwaves in the industry, from the locations themselves all the way down the supply chain. One of the biggest suppliers in the nation, Lamb Weston, is feeling the pinch big-time.
The company is the largest producer of french fries in North America, supplying fast food chains, restaurants and grocery stores. Now, it is closing a production plant in Washington state, laying off nearly 400 employees and scaling back production.
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In a press release, Lamb Weston CEO Tom Werner says they expect the slump in restaurant traffic and frozen potato demand to continue through 2025, which is why the company is cutting jobs and adjusting production. With inflation pushing up prices, customers are spending less at chains like McDonald’s.
About 80% of all fries consumed in the U.S. are from fast-food chains. McDonald’s has been trying to win back customers with value deals, like its $5 meal deal, which comes with a small fry, a burger, nuggets and a drink.
However, according to recently released numbers, it’s not helping. McDonald’s saw its U.S. sales drop by 0.7% last quarter compared to a year ago, and customer traffic across fast-food chains fell by 2% in the same period.
Lamb Weston’s stock has dropped by nearly 35% this year, and net income has plunged by 46%. With customers cutting back on eating out and opting to cook at home, the future look uncertain for both fast-food chains and the chain suppliers.
