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A major french fry supplier is cutting jobs as customers continue to count their pennies amid inflated prices at fast-food chains.
Lamb Weston, the largest producer of french fries in North America, announced last week it was closing its plant in Connell, Washington, meaning 375 employees, or 4% of its workforce, would be laid off, according to an earnings report released last week.
“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,” Tom Werner, Lamb Weston president and CEO, said last week on an earnings call.
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Wendy’s Co. french fries are arranged for a photograph at a restaurant location in Mt. Vernon, Illinois, U.S., on Wednesday, July 29, 2015. Wendy’s Co. is scheduled to release quarterly earnings on Aug. 5. (Luke Sharrett/Bloomberg via Getty Images / Getty Images)
“Together, we expect these actions will help us better manage our factory utilization rates and ease some of the current supply-demand imbalance in North America,” he added. “We are also taking actions to reduce operating expenses, including reducing headcount and eliminating certain unfilled job positions, as well as reducing capital expenditures. The combined estimated savings from these actions are reflected in our updated fiscal 2025 targets.”
The Eagle, Idaho-based company told Fox Business the restructuring won’t impact supply to customers.
Fast-food chains have felt the consequences of inflation as cash-strapped customers have been more careful about patronizing many restaurants. A survey in May revealed that 80% of Americans considered fast food to be a “luxury” because of high prices.
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An employee fills a bag with french fries at a branch of the McDonald’s fast food chain. A major supplier of french fries has closed a plant in Washington, the company said last week. (Matthias Balk/picture alliance via Getty Images / Getty Images)
To win back customers, many chains launched meal deals. Over the summer, McDonald’s launched a $5 Meal Deal that includes a McDouble or McChicken sandwich, four-piece chicken nuggets, small fries and a small fountain drink.
FOX Business has reached out to McDonald’s.
Other rivals like Burger King and Wendy’s also launched similar deals that come with fries as well. Despite the value meals, the demand for fries has dropped, Werner said.
“It’s important to note that many of these promotional meal deals have consumers trading down from a medium fry to a small fry,” he said.
A McDonald’s McDouble cheeseburger, small fries, four-piece chicken nuggets, and a small soft drink arranged in New York, US, on Monday, June 17, 2024. On June 25, McDonald’s kicked off a marketing campaign and a new $5 meal deal, raising the stakes (Lucia Buricelli/Bloomberg via Getty Images / Getty Images)
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Overall, restaurant traffic in the U.S. was down 2% last quarter and 3% the previous quarter compared to the same time last year, according to Lamb Weston.
