Inflation has been the biggest villain in American life in recent years, and it has a new victim: McDonald’s French fries.
While it may seem impossible to believe, people are eating less fries. In fact, battered by inflation, Americans are eating out less in general. In August, McDonald’s reported its first drop in sales since the COVID-19 pandemic forced it to shut down restaurants. And earlier this year, a survey from LendingTree found that more than 60% of Americans have cut down on fast food because of prices.
That’s not good news for french fry makers.
McDonald’s fry supplier lays off 4% of its workforce. Lamb Weston, the largest producer of frozen french fries in the U.S., this month announced that it would lay off 4% of its global workforce, or about 400 people, and close one of its plants located in Connell, Washington. The company cited decreased restaurant traffic and french fry demand in its decision, adding that it expected the situation to continue through the remainder of the fiscal year.
According to Fortune, McDonald’s is Lamb Weston’s largest customer and accounts for 13% of its sales. The company also supplies fries to KFC and Taco Bell.
Fast food is the new “luxury” item. In addition to highlighting the decline in fast-food outings, the LendingTree survey also made headlines because it reported that 78% of Americans consider fast food to be a “luxury” item. There’s a reason for that.
Fast food prices rose 28% from 2019 to 2023, CNBC reported. This is due to a variety of factors, including increased labor costs and prices for materials like packaging. Customers are feeling the pinch, and they’re not happy about it.
Case in point. A photo of a $18 Big Mac combo went viral last year, with consumers outraged that McDonald’s could charge so much when it markets itself as an affordable fast-food restaurant.
The incident prompted a response from McDonald’s USA president Joe Erlinger a year later. In an open letter, he pointed out that the combo was only that price at one location in Connecticut out of more than 13,700 in the country. Overall, the average price of a Big Mac in the U.S. was $5.29 in 2024, Erlinger said.
Notably, that’s still 21% higher compared to the price in 2021, something he acknowledged.
Smaller fries with that. McDonald’s and other fast-food chains have been trying to encourage cash-strapped customers to come back in recent months by offering value meals, which consist of a bundle of lower-priced options. McDonald’s has rolled out a $5 Meal Deal, with competitors like Wendy’s, Popeyes, and Taco Bells offering similar value meals.
When it comes to french fries though, value meals aren’t likely to make Americans eat more fries. As such, they’re of little help to fry companies like Lamb Weston.
“It’s important to note that many of these promotional meal deals have consumers trading down from a medium fry to a small fry,” Werner, Lamb Weston’s CEO, said.
Image | Daniel Foster | Thomas Hawk
Related | AI Isn’t Ready to Understand Our Food Orders Yet. A Giant Like McDonald’s Just Proved It
View 0 comments