Major McDonald’s French Fry Supplier Closes Plant in Washington, Affecting Jobs as Inflation Persists
Lamb Weston Assures Customers Will Not Be Affected
The pressure of inflation has led to a major french fry supplier, Lamb Weston, making the difficult decision to close its plant in Connell, Washington. As a result, 375 employees, accounting for 4% of the workforce, will unfortunately be laid off. The announcement came through an earnings report released last week.
According to Tom Werner, President and CEO of Lamb Weston, the need for this restructuring is due to the ongoing softness in restaurant traffic and frozen potato demand in relation to supply. Werner further mentioned that they foresee these challenges continuing throughout fiscal year 2025. Despite these changes, Lamb Weston has ensured that the restructuring will not impact its ability to supply customers.
The Effects of Inflation on Fast Food Chains
Fast-food chains, including McDonald’s, have felt the impact of inflation as budget-conscious customers have become more cautious in their spending at restaurants. In fact, a survey conducted in May revealed that 80% of Americans considered fast food to be a luxury because of high prices.
To attract customers and regain their trust, many chains have introduced meal deals. McDonald’s, for example, launched a $5 Meal Deal over the summer. This deal includes a choice between a McDouble or McChicken sandwich, four-piece chicken nuggets, small fries, and a small fountain drink.
Value Meals Cause a Shift in Fry Demand
Burger King and Wendy’s have also followed suit by offering similar value meals that come with fries. However, despite these efforts, the demand for fries has declined, according to Werner.
“It’s important to note that many of these promotional meal deals have consumers trading down from a medium fry to a small fry,” Werner explained. This change in customer behavior has contributed to the reduced demand for larger fry sizes.
The Current State of the Restaurant Industry
Overall, the foodservice industry has experienced a decline in customer traffic, with a 2% decrease last quarter and a 3% decrease the previous quarter when compared to the same time last year, according to Lamb Weston.
As inflation continues to be a concern, it is essential for both suppliers and chains to adapt their strategies to meet the changing needs and expectations of customers. It remains to be seen how the industry will navigate these challenges in the coming months and years.
