Lamb Weston Holdings, Inc., the largest producer of frozen french fries in North America, announced it will be closing one of its key processing plants in Washington, resulting in the layoff of 375 workers.
The decision, announced in an October 1 earnings report, comes in response to declining demand for frozen potatoes and reduced restaurant traffic, which has been impacting the company’s bottom line.
The Connell, Washington plant, an “older, higher-cost” facility, is slated for closure as part of a broader effort to improve operational efficiency and cut costs. Lamb Weston CEO Tom Werner detailed these restructuring measures, which will reduce the company’s workforce by approximately 4 percent. The plant’s shutdown is a significant move for the Idaho-based company, which supplies frozen fries to major fast-food chains, including McDonald’s.
In the company’s first-quarter earnings report for Fiscal Year (FY) 2025, Werner explained the tough conditions that have led to this decision. Lamb Weston’s net income for the first quarter dropped by a staggering 46 percent, falling to $127 million compared to the same quarter in FY 2024. This sharp decline was attributed to “soft” demand for frozen potatoes and reduced foot traffic at restaurants, both of which have persisted despite the company’s efforts to improve performance.
“We delivered first-quarter financial results that were generally in line with our expectations, driven by sequentially improved volume performance, solid price/mix, and strict management of operating costs,” Werner said in the report. However, he noted that despite these efforts, demand for frozen potatoes relative to supply remains weak. “We believe it will remain soft through the remainder of fiscal 2025.”
The closure of the Connell plant is part of Lamb Weston’s broader strategy to “improve operating efficiency, profitability, and cash flows,” according to Werner. By cutting costs associated with running older and more expensive facilities, the company aims to maintain profitability while also positioning itself to make strategic investments for future growth. Werner emphasized that these proactive steps are necessary to ensure the company continues to create value for its stakeholders and support its customers, even amid challenging market conditions.
Lamb Weston, which has long been a major supplier of french fries to McDonald’s and other fast-food chains, faces a changing landscape as consumer habits evolve and economic pressures mount. Fast food prices have surged by 33 percent since 2019, according to data from the Department of Labor, further straining restaurant traffic. The same period has also seen grocery prices rise by 26 percent, squeezing consumers’ budgets even further.
In response to these trends, fast-food chains have been rolling out a series of value-driven promotions to entice customers and increase foot traffic. Over the summer, McDonald’s introduced a $5 “Meal Deal” to attract budget-conscious consumers. The deal includes a McDouble or McChicken sandwich, four-piece chicken nuggets, small fries, and a small drink. Competing chains like Burger King and Wendy’s have also launched similar offers, bundling meals that include fries at a lower cost.
However, despite these efforts, demand for fries has not bounced back to pre-pandemic levels. Werner pointed out that while these promotions help drive traffic, they are often encouraging customers to “trade down” to smaller portions of fries rather than ordering larger sizes. “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 said, highlighting how the changes in consumer behavior are impacting sales.
This shift has had significant implications for suppliers like Lamb Weston, whose business depends heavily on the fast-food industry’s demand for frozen potatoes. As fewer customers order fries, or opt for smaller portions, companies like Lamb Weston face the challenge of adjusting their operations to remain competitive while contending with higher costs and lower demand.
In addition to the Connell plant closure, Lamb Weston may take further actions to streamline operations as it works to weather the current economic climate. While the company remains a key player in the frozen potato industry, its performance over the next several quarters will depend heavily on whether consumer demand rebounds and how effectively the company can manage costs in the interim.
The ripple effects of Lamb Weston’s struggles are already being felt in the local economy, particularly in Connell, where the plant closure will directly impact hundreds of workers. As 375 employees prepare to lose their jobs, the company has not yet provided details about potential support or severance packages for those affected.
The closure is yet another indicator of how shifting consumer behaviors, rising costs, and evolving market conditions are reshaping industries across the board. For Lamb Weston and its competitors, the challenge moving forward will be finding ways to balance the need for cost-cutting measures with the ability to meet fluctuating demand in an unpredictable market.
So McDonald’s won’t be asking you; “Want more fries.?”
I used to buy frozen fries at the market, but when they tripled their price, I stopped buying them at all.
I cut my cable-vision when Faux Snews fired Tucker Carlson. Have since invested in precious metals like gold & silver, but mainly brass & lead. Guns are still flying off the shelves, thanks to obama, Obiden and the Ho from San Fran-sicko
Obama leading from behind! As he helps America’s most formidable enemies make America LAST!
What do ya say Democrats and Rino’s, did he earn a 4th term as your Destructor in Chief!
Oh NOOOOOOOO! What will all the obese pink haired antifa coach potatos going to do?
Retail price of potatoes $1.00 a pound. Retail price of frozen cut (frenched) potatoes: $1.60 to 3.00 a pound.
50 pound bag fresh potatoes: .70 a pound.
Tons of potatoes…a LOT cheaper.
Storage and handling Losses of fresh vs frozen product: extremely high.
Bottom line, 300% to 600%- minimum value added. Maybe, just maybe the problem is the price is just getting too high.
all according to plan… the plan to destroy socialist Amerika (formerly a republic 1776-1865)