A major supplier of McDonald's french fries is cutting jobs as cash-strapped customers shun the fast-food industry due to soaring prices.
Last week, Lamb Weston, North America's largest french fry maker, announced it would cut 4% of its global workforce and scale back production lines following a dismal financial report. As first reported by CNN.
The Eagle, Idaho-based company abruptly closed its Connell, Washington, plant, resulting in the loss of 375 jobs. According to NBC Nonstop Local.
“Restaurant foot traffic and frozen potato demand continue to be weak relative to supply and are expected to remain weak through the remainder of fiscal 2025,” Lamb Weston CEO Tom Warner said in a statement. I'm thinking about it.''
“Together, we hope these actions will help us better manage factory utilization and alleviate some of the current supply and demand imbalances in North America.”
Lamb Weston's stock price has fallen nearly 35% since the beginning of the year.
Consumers hit by inflation have largely cut back on spending at fast food restaurants, choosing instead to cook at home.
Lamb Weston also supplies restaurants and grocery stores, but relies heavily on its fast food business.
Roughly 80 percent of the fries consumed in the U.S. come from fast-food restaurants, Lamb-Weston said.
To win back customers, fast food chains have launched a number of deals on affordable meals.
This summer, McDonald's launched a $5 meal deal that includes a McDouble or McChicken, four-piece nugget, small fries and a small fountain drink.
Rivals like Burger King and Wendy's also offer competing deals, most of which also include small fries.
However, that value meal reduced the overall demand for fries.
“Many of these promotional meal deals will move consumers from mid-price to small-price,” Werner said on an earnings call last week.
Lamb Weston did not immediately respond to a request for comment.
McDonald's is Lamb Weston's biggest customer. Troubles at the Golden Arches have also created difficulties for Lamb Weston, and McDonald's sales continue to decline.
McDonald's U.S. same-store sales fell 0.7% last quarter compared to the same period last year.
Lamb Weston's first quarter fiscal 2025 results It wasn't that good.
The french fry supplier's net sales fell 1% compared to the same period last year, operating profit fell 34% and net profit plunged 46%.
