Fast-food chains are struggling to attract customers as prices soar, leading to a ripple effect on suppliers. Lamb Weston, the leading producer of french fries in North America, has announced the closure of its Connell, Washington plant, resulting in the loss of 375 jobs, equivalent to 4% of its workforce. This move is a response to soft demand for frozen potatoes and declining restaurant traffic.
According to Tom Werner, Lamb Weston’s president and CEO, the company expects the current market conditions to persist through fiscal 2025. To mitigate the impact, Lamb Weston is taking measures to optimize factory utilization rates, reduce operating expenses, and eliminate unfilled job positions. These actions are projected to yield significant cost savings.
The fast-food industry has been grappling with the consequences of inflation, as customers become increasingly price-sensitive. A recent survey revealed that a staggering 80% of Americans now view fast food as a luxury due to high prices. In response, many chains have introduced value meal deals to lure customers back. McDonald’s, for instance, launched a $5 Meal Deal featuring a sandwich, chicken nuggets, fries, and a drink. Despite these efforts, demand for fries has remained sluggish.
Werner noted that promotional meal deals often lead customers to downgrade from medium to small fries, further exacerbating the decline in demand. The ripple effect is evident in the latest restaurant traffic figures, which show a 2% decline last quarter and a 3% drop the previous quarter compared to the same period last year. As the industry navigates these challenging times, suppliers like Lamb Weston are being forced to adapt and make tough decisions to stay afloat.
Leave a Reply