The french fry king of America raises the alarm

The fast-food industry, including McDonald’s, is being detested by Americans. This damages providers of french fries, such as Lamb Weston.

A production facility in Washington state is set to close by Lamb Weston, the biggest manufacturer of french fries in North America and a significant supplier to fast-food chains, eateries, and supermarkets. In reaction to declining client demand, the company said last week that it will temporarily halt manufacturing lines and lay off approximately 400 workers, or 4% of its total workforce.

Lamb Weston (LW) stock has decreased by 35% so far this year.

The huge potato company has too much inventory at a time when demand is low. Customers are turning away from fast-food companies as a result of restaurant pricing rising more quickly in recent years than those of grocery stores.

Lamb Weston has suffered as a result of this change in consumer behavior, since fewer people are making french fries at home. Fast-food outlets provide almost 80% of the french fries eaten in the US, according to Lamb Weston.

Value menus are being marketed by fast-food restaurants like McDonald’s in an effort to win back customers. A McChicken sandwich or a McDouble cheeseburger, small french fries, four chicken nuggets, and a small soft drink are all included in the $5 meal that McDonald’s has introduced. However, because people are purchasing less fries, Lamb Weston isn’t benefiting from these promotions.

During an earnings call last week, Thomas Werner, CEO of Lamb Weston, stated, “Many of these promotional meal deals have consumers trading down from a medium fry to a small fry.”

Weston Lamb did not immediately respond to CNN’s request for comment.

Thirteen percent of Lamb Weston’s revenues are attributed to their main customer, McDonald’s. Lamb Weston is going where McDonald’s is going.

McDonald’s is also having trouble. Due to a decline in patronage, sales at US restaurants that have been operating for at least a year decreased by 0.7% in the most recent quarter when compared to the same time in the previous year.

In a research note sent to clients this week, analyst R.J. Hottovy of Placer.ai, an analytics company, stated that Lamb Weston is also heavily exposed to other fast-food businesses.

In comparison to the same period last year, customer traffic to fast-food restaurants decreased by 2% in the most recent quarter and by 3% in the preceding quarter, as reported by Lamb Weston.