America’s Biggest French Fry Supplier Forced to Make Significant Cuts as Inflation Takes a Toll
Lamb Weston, a major supplier of french fries to fast food chains like McDonald’s, is experiencing significant financial struggles due to a decline in fast food consumption, which has been exacerbated by inflation and rising prices. The company announced it will lay off approximately 400 employees, representing 4% of its workforce, and close a production facility in Washington state as part of its restructuring efforts. Fast food traffic has dropped 2% in the last quarter, following a 3% decline the previous quarter. The overall sales have dipped, with a reported 34% decline in net income compared to the previous year. Lamb Weston attributes the falling sales to customers opting for smaller meal deals and reduced consumption at fast food outlets, which are experiencing price increases. The rising cost of fast food items has been a concern, with reports indicating that prices for items like french fries and Big Macs have soared significantly since the current U.S. administration took office.
The company that stocks McDonald’s with its french fries is paying the price for Americans’ inflation-induced turn away from fast food.
Lamb Weston, North America’s king of fries and a major supplier to fast food chains, is cutting jobs amid falling profits, according to CNN.
The company will lay off about 400 people, which amounts to 4 percent of its workforce at a time when its price has fallen 25 percent this year. It is closing a production facility in Washington state as well.
About 80 percent of french fries consumption in America comes from fast food chains, according to the company.
I remember a time when I would eat at fast food places because I didn’t have much money.
Look how much fast food prices are up despite inflation only being up 31%.
McDonald’s prices up 100% since 2014. pic.twitter.com/BpgvpgBh0b
— 💯 Cary Kelly 💯 (@CaryKelly11) September 7, 2024
McDonald’s is Lamb Weston’s largest customer, making up about 13 percent of its sales.
The company said promotions that offer low prices are cutting back what consumers buy.
“Many of these promotional meal deals have consumers trading down from a medium fry to a small fry,” Lamb Weston CEO Thomas Werner said during an earnings call.
We cannot reward incompetence and deceit.
2 years ago, Kamala Harris cast a tie-breaking vote in the senate for the “inflation reduction act”.
Kamala casting the tie-breaking vote on the ‘Inflation Reduction Act’
She’s responsible for inflation.
We are now over $35 Trillion… https://t.co/g1JcvBlFNf pic.twitter.com/U4PHeHLLrU
— Eloisa Elias (@eloeliasds) October 2, 2024
Consumers are also shunning fast food.
Lamb Weston says that fast food traffic overall dipped 2 percent in the last quarter after a 3 percent drop the quarter before that.
In a recent post on its website, Lamb Weston said that over the past quarter, its net income dropped 34 percent.
North American sales were down $31.7 million a 3 percent decline over the same quarter in 2023, the company said.
A Biden-Harris one-two punch to Americans’ wallets.
This administration’s historic inflation is hurting everyone.https://t.co/go5aV9ZvKU
— Senator Eric Schmitt (@SenEricSchmitt) July 29, 2024
In May, the House Republican Conference noted that fast food prices have soared during the Biden-Harris administration.
Republicans said that as of May, the price of a medium order of french fries at McDonald’s was up 167.6 percent
The price of a Big Mac meal rose 103.5 percent since President Joe Biden and Vice President Kamala Harris took office, while the price of a Hamburger Happy Meal rose 140.6 percent, the GOP study said.
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