America's French Fry Industry Faces Slowdown as Fast Food Sales Decline
Right now, the iconic McDonald’s french fry, a staple of fast food in America, is at the center of an industry shakeup. Lamb Weston, the largest french fry supplier in North America, has been hit hard by a downturn in demand. With fewer customers flocking to fast food chains like McDonald's, the ripple effects have reached their suppliers, including Lamb Weston, who announced a major decision recently: they are shutting down a production plant in Washington and laying off nearly 400 workers, which makes up about 4% of their workforce.
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This move comes in response to a noticeable drop in demand for fast food, a sector that typically consumes 80% of the french fries sold in the U.S. Economic pressures, such as the rising cost of living, have led consumers to cut back on eating out. With restaurant prices rising faster than grocery prices, more people are opting to cook at home, reducing their trips to places like McDonald’s. Even promotions like McDonald’s $5 meal deal haven’t been enough to reverse the trend. In fact, these deals often lead to customers downsizing their fry orders from medium to small, which only worsens the situation for companies like Lamb Weston.
For Lamb Weston, this shift is concerning. McDonald’s, their largest customer, accounts for about 13% of their total sales. As McDonald’s struggles to maintain foot traffic, their suppliers feel the pinch as well. McDonald’s reported a 0.7% drop in sales at U.S. locations that have been open for over a year, contributing to a 35% drop in Lamb Weston’s stock this year. The trend reflects an industry-wide slump, with fast food chains overall seeing a 2-3% decline in customer traffic over the last two quarters.
This downturn highlights the changing habits of American consumers, as many look to save money by avoiding fast food, even when value meals are offered. For the french fry industry, this shift is a wake-up call, as they brace for continued challenges in the months ahead.
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