U.S. News
Major Fast Food French Fry Supplier Is Closing Causing Supply Demand and Job Cuts
Clear Facts
- Lamb Weston, North America’s largest french fry producer, is closing its Connell, Washington plant, resulting in 375 job losses.
- The company cites soft restaurant traffic and frozen potato demand as reasons for the closure and job cuts.
- Fast-food chains are struggling with inflation, leading to reduced demand for fries and the introduction of meal deals to attract customers.
In a significant move that highlights the ongoing economic challenges faced by the fast-food industry, Lamb Weston has announced the closure of its Connell, Washington plant. This decision will lead to the layoff of 375 employees, representing about 4% of the company’s workforce. The closure comes amid a backdrop of inflated prices and reduced consumer spending at fast-food establishments.
Tom Werner, Lamb Weston’s president and CEO, explained the rationale behind the decision during an earnings call.
“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,” he stated.
The company, headquartered in Eagle, Idaho, is taking steps to manage its resources more effectively. Werner added,
“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.”
Despite the plant closure, Lamb Weston assures that the restructuring will not affect its supply to customers. The company is also focusing on reducing operating expenses and capital expenditures to achieve estimated savings reflected in their updated fiscal 2025 targets.
The fast-food industry has been grappling with the effects of inflation, as many consumers now view fast food as a “luxury” due to high prices. A survey conducted in May revealed that 80% of Americans hold this view. In response, fast-food chains like McDonald’s have introduced meal deals to entice customers back. Over the summer, McDonald’s launched a $5 Meal Deal, which includes a McDouble or McChicken sandwich, four-piece chicken nuggets, small fries, and a small fountain drink.
Other competitors, such as Burger King and Wendy’s, have followed suit with similar promotions. However, the demand for fries has not seen a significant uptick. Werner noted,
“It’s important to note that many of these promotional meal deals have consumers trading down from a medium fry to a small fry.”
The overall decline in restaurant traffic in the U.S. is evident, with a 2% decrease last quarter and a 3% drop in the previous quarter compared to the same period last year, according to Lamb Weston. As the industry navigates these turbulent times, the impact of inflation continues to be felt across the board.
Let us know what you think, please share your thoughts in the comments below.
Jim childress
October 14, 2024 at 7:03 am
I have heard Bill gates has cornered the market contact for McDonald’s wit only his potatoes for McDonald’s fries and everyone know we’re bill gates stands on wanting the population reduced from the 80 billion to the lower 50 billions and his other ventures with the WHO. That’s in my opinion is we’re the demand for the fast food chain (fry not for me) is the problem I’ve stopped eating store bought potatoes period raise my own along with a lot of others as well
Das F.B.I.
October 14, 2024 at 1:08 pm
In-N-Out won’t have a problem.
Camille Gilliam
October 15, 2024 at 12:01 am
I quit eating french fries because I don’t know what kind of oil they are using Canola oil was not made for human consumption, it is made from the rape seed plant which is poisonous. It was made to run the space shuttle on, when they shut down the space shuttle they switched it for us to cook with.