A serious french fry supplier is cutting jobs as customers proceed to count their pennies amid inflated prices at fast-food chains.
Lamb Weston, crucial producer of french fries in North America, announced last week it was closing its plant in Connell, Washington, meaning 375 employees, or 4% of its workforce, could possibly be laid off, in response to an earnings report released last week.
“Restaurant traffic and frozen potato demand, relative to offer, proceed to be soft, and we imagine it’ll remain soft through the remainder of fiscal 2025,” Tom Werner, Lamb Weston president and CEO, said last week on an earnings call.
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“Together, we expect these actions will help us higher manage our factory utilization rates and ease just a few of the present supply-demand imbalance in North America,” he added. “We’re also taking actions to cut back operating expenses, including reducing headcount and eliminating certain unfilled job positions, along with reducing capital expenditures. The combined estimated savings from these actions are reflected in our updated fiscal 2025 targets.”
The Eagle, Idaho-based company told Fox Business the restructuring won’t impact supply to customers.
Fast-food chains have felt the outcomes of inflation as cash-strapped customers have been more careful about patronizing many restaurants. A survey in May revealed that 80% of Americans considered fast food to be a “luxury” on account of high prices.
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To win back customers, many chains launched meal deals. Over the summer, McDonald’s launched a $5 Meal Deal that contains a McDouble or McChicken sandwich, four-piece chicken nuggets, small fries and a small fountain drink.
FOX Business has reached out to McDonald’s.
Other rivals like Burger King and Wendy’s also launched similar deals that include fries as well. Despite the value meals, the demand for fries has dropped, Werner said.
“It can be crucial to note that numerous these promotional meal deals have consumers trading down from a medium fry to a small fry,” he said.
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Overall, restaurant traffic throughout the U.S. was down 2% last quarter and three% the previous quarter compared with the similar time last yr, in response to Lamb Weston.
Original article source: Major McDonald’s french fry supplier closes plant in Washington, slashes jobs as inflation continues