A major McDonald’s french fry supplier, Lamb Weston, has slashed jobs and abruptly shut down a factory as inflation-weary customers cut back on fast-food orders, including fries. With rising prices, many diners are downsizing their meals or skipping side orders entirely, leading to a drop in demand for fries. To counter slowing sales, McDonald's introduced a $5 Meal Deal this summer, offering smaller portions, including fries, alongside competitors like Burger King and Wendy's.
Lamb Weston, North America's largest french fry producer, supplies 80% of fast-food fries in the US. CEO Tom Werner noted that value meal promotions have prompted customers to switch from medium to small fries, further impacting sales. As consumers pull back from fast-food dining due to inflation, particularly in states like California where minimum wage increases have driven menu prices higher, fast food chains and their suppliers feel the strain.
McDonald's US same-store sales saw a 0.7% decline in the last quarter compared to the previous year. Lamb Weston, which also supplies premium restaurants and grocery stores, heavily relies on its fast-food business, making the downturn especially damaging. The company recently announced a 4% reduction in its global workforce and the closure of its Connell, Washington plant, which resulted in 375 job losses.
As the fast-food sector faces ongoing challenges, Lamb Weston expects soft demand for frozen potatoes to persist through fiscal 2025, adjusting production to match the current supply-demand imbalance.
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