Fast food sales slowdown forces major McDonald’s french fry supplier to cut jobs
There is a growing trend among Americans to avoid fast food, which is having a disruptive effect on the sector from the individual restaurants to the entire supply chain. Lamb Weston, one of the country’s largest suppliers, is really feeling the squeeze. The company supplies restaurants, grocery shops, and fast food chains with its fries, making it the largest producer of french fries in North America. Presently, it is reducing output, firing close to 400 workers, and closing a production facility in the state of Washington.
According to a news release from Lamb Weston CEO Tom Werner, the company is reducing staff and modifying output because they anticipate that the decline in restaurant traffic and frozen potato demand will last until 2025. Prices are rising due to inflation, thus consumers are spending in McDonalds.
Fast-food restaurants provide almost 80% of the fries that Americans eat. Value offers, such as their $5 meal deal that includes a small fry, a burger, nuggets, and a drink, are one of McDonald’s strategies to woo back customers. But, current data indicates that it isn’t making a difference. Fast-food businesses had a 2% decline in consumer visitation during the same quarter last year, while McDonald’s witnessed a 0.7% decline in U.S. sales.
With a 46% decline in net income, Lamb Weston’s stock has fallen by about 35% this year. Future prospects for fast-food restaurants and their suppliers appear bleak as consumers choose to cook at home instead of going out to dine.
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