McDonald’s largest french fry supplier shutters factory, CEO blames meal deals

October 11

Less Americans want large fries with that, which has factored into McDonald’s largest french fry supplier shuttering a production plant and cutting costs, according to the company’s CEO.

Idaho-based Lamb Weston, the largest producer of french fries in North America, announced a restructuring plan on Oct. 1 that included immediately closing a production plant in Connell, Washington, and cutting 4% of its workforce, according to a news release. About 375 employees were laid off by the plant closing, according to NBC Washington affiliate NBC Right Now.

“Lamb Weston is confident in the world’s ongoing love of fries — the closure of one of our older facilities accounts for less than 5% of our production capacity, so this adjustment simply helps address a current supply-and-demand imbalance,” Lamb Weston spokesperson Teresa Paulsen said in a statement to TODAY.com.

The cost-cutting comes at a time when many large fast-food chains have created meal deals to spur demand after rising prices turned off customers and resulted in less foot traffic. McDonald’s announced a $5 meal deal in May that features four items: the choice of a McChicken or McDouble, a four-piece chicken nuggets, fries and a drink.

The fast-food giant then announced in September the deal will remain through the end of the year. McDonald’s, which accounts for 13% of Lamb Weston’s sales, did not immediately respond to a request for comment from TODAY.com.

Popeye’s, Pizza Hut, Taco Bell, Wendy’s and Burger King also created promotional deals. Lamb Weston president and CEO Thomas Werner said the offerings by various fast-food chains have caused a drop in volume for the french fry supplier.

“Many of these promotional meal deals have consumers trading down from a medium fry to a small fry,” Werner said on an earnings call on Oct. 2. “So while we benefit from improving traffic trends, consumers trading down in serving size acts as a partial headwinds for our volumes.”

Werner also said demand has been sluggish at a time when Lamb Weston is oversupplied. The company announced net sales declined 1% and net income declined 46% from the prior year quarter.

“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,” Werner said in a statement in the news release.

Lamb Weston’s stock is down 35% since the beginning of the year.

McDonald’s reported in July that sales were down 0.7% for the quarter and foot traffic fell at its U.S. locations, one year after a 10.3% sales increase due to the popularity of the Grimace Birthday Meal.

Story continues

“At the end of the day, we expect customers will continue to feel the pinch of the economy and a higher cost of living for at least the next several quarters in this very competitive landscape,” McDonald’s U.S. President Joe Erlinger said on the company’s earnings call, according to CNBC.

This article was originally published on TODAY.com

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