McDonald’s French Fry Provider Lamb Weston Closes Plant, Lays Off Workers

French fry maker Lamb Weston is shutting down its Connell, Washington, operation and laying off about 375 employees. The company is a major supplier to fast-food giant McDonald’s.

Lamb Weston is the biggest french fry producer in North America and has been hit hard due to inflation slowing consumer demand for fast food. Consumers weary of rising prices at fast-food chains are opting to cook at home instead.

“Restaurant traffic and frozen potato demand, relative to supply, continue to be soft, and we believe it will remain soft through the remainder of fiscal 2025,” said Lamb Weston CEO Tom Werner in the Q1 fiscal 2025 earnings report released last week.

Lamb Weston’s recent report revealed a company potentially in trouble. Compared to the first quarter of 2024, net sales for Lamb Weston fell 1% alongside a 34% drop in operations income and a 46% loss of net income. Also announced in the report were the abrupt plant closing in Washington and the layoffs effective Oct. 1.

Fast-Food Meal Deals Help Restaurants, Not Lamb Weston

Lamb Weston provides french fries for both restaurants and grocery stores, yet the majority of its sales come from fast-food chains. Roughly 80% of fast-food fries in the U.S. come from this single company, as reported by the New York Post.

To avoid the shock of higher prices, many fast-food restaurants have been busy luring customers back with low-cost menu items such as the $5 Meal Deal at McDonald’s. However, the deals aren’t helping Lamb Weston. In fact, they have resulted in a drop in demand for fries, according to Werner.

“Many of these promotional meal deals have consumers trading down from a medium fry to a small fry,” Werner said, according to the outlet.

Menu price increases at fast-food restaurants, which average 2.9%, have likely led to less customer foot traffic. Restaurant Business reported a 2.3% traffic decline in the second quarter of 2024. The drop was not as sharp as the 3.5% witnessed in the first quarter, which potentially means the value meal deals may be having a positive effect.