Mcdonald’s largest french fries supplier Lamb Weston, is facing an economic slowdown or reduction in annual monetary growth rate. It looks like the Americans are not cheesy for the French fires anymore, due to price hikes in the fast food restaurants that slow the demand.
Lamb Weston Co. has been facing economic challenges since earlier this year due to many fast food restaurants hiking the prices of their menu, which led to the loss of appetite for the french fries the US people have over the years. Due to the economic slowdown Lamb Weston Co. earlier this year announced that it would lay off 4% of its employees.
What is the Reason for the Lamb Weston to Cut-Off It’s Workforce
Lamb Weston Co. is the world’s largest company that produces and processor of frozen french fries, and other potato-related products. Its main customer is the world’s most famous drive-thru fast-food restaurant McDonald’s.
Alone from McDonald’s, it generated 13% of its total sales and produces 250 million pounds of frozen potato products annually for the fast-food chain. Lamb Weston Co. shut down its Conell, Washington production plant and laid off 4% (approx 428) employees this year. Its share price has plummeted by about 33%.
The main reason behind their Connell plant shutdown and deduction of their workforce is McDonald’s surplus price hike on all of the foods that affected the appetite of many Americans.
Even other fast food chain restaurants raised their menu price turning the common meals for all Americans into luxury foods, that decline the customer on a daily basis. Now people prefer home-cooked foods.
The fast food chain customer traffic reduces to 2% over the year and it continues to falter through fiscal 2025.
Lamb Weston’s other customers are Wendy’s and Yum Brands. Yum brands serve the main fast food outlets like Pizza Hut, KFC, and Taco Bell.
The revenue of McDonald’s also was reduced to 1% last quarter and Yum brand revenue was deducted to 4.5% for its second quarter.
How is Mcdonald and Wendy Turning the Customer in?
Mcdonald a fast food chain industry due to an economic plunge increased its prices of the foods and drinks inadvertently declining its customer size. As more customers not purchasing fast food on a daily basis it becomes a luxury for them.
It affected the large giant fast food chain industry revenue last year. The introduction of promotional meal deals to lure back customers including Mcdonald’s $5 meal deal and Wendy’s $3 breakfast deal.
It increased the traffic but couldn’t help much to the Lamb Weston as people are not upgrading the size of the fries.
The CEO of the French fried company Tom Werner said “It’s important to note that many of these promotional meal deals have consumers trading down from a medium fry to a small fry,
Lamb Weston’s 80% of sales come from fast food restaurants, to maintain the flow they also tie up with many other fast food chains.
