It appears that customers at fast food restaurants are choosing to skip french fries or are opting for smaller portions. This drop in demand has prompted a significant fries supplier to McDonald’s to close one of its facilities and reduce its workforce.

Lamb Weston, a food company based in Eagle, Idaho, which derives about 14% of its revenue from McDonald’s, announced earlier this month that it has shut down its plant in Connell, Washington, and has laid off approximately 4% of its total workforce while also eliminating some unfilled job positions.

“The number of customers visiting restaurants and the demand for frozen potatoes are both relatively weak, and we anticipate this trend will continue through the rest of fiscal 2025,” stated CEO Tom Werner in a press release on October 1.

Customer visits to burger-focused fast food chains in the U.S. saw a decline of roughly 3% during Lamb Weston’s latest quarterly period, which ended on August 25. This marked an improvement compared to a more than 4% decrease in the previous quarter, according to comments made by Werner in an earnings call, as transcribed by S&P Global Market Intelligence.

Overall customer traffic in U.S. fast food outlets fell by 2%, a slight improvement from the 3% drop seen in the prior three-month period, he noted.

What contributed to bringing more customers into restaurants from June to August? Werner attributed it to a rise in promotional activities, specifically mentioning the fast food value meal trend, which surged during the summer, including McDonald’s $5 Meal Deal.

However, the increase in traffic didn’t necessarily lead to more fries being sold.

“It’s crucial to point out that many of these promotional meal deals are causing customers to switch from a medium fry to a small fry,” Werner explained during the earnings call.

McDonald’s $5 Meal Deal includes a small fries, a McDouble or McChicken sandwich, a four-piece Chicken McNuggets, and a small soft drink. “While we are benefiting from an uptick in traffic, the shift to smaller sizes is creating some challenges for our volume,” Werner added.

Lamb Weston, which separated from Conagra in 2016, is also “temporarily reducing production schedules and lines” at several of its North American facilities, as per Werner, while managing “high finished goods inventory levels.”

Are we consuming fewer McDonald’s fries?

There are indications that the consumption of fries from the chain may have declined.

Sales for McDonald’s in the U.S. decreased by 0.7% in the second quarter of 2024, while globally, they dropped by 1%, marking the first instance of a global sales decline since Q4 2020, which was during the economic downturn caused by the COVID-19 pandemic.

Lamb Weston reported net sales of $1.65 billion for the quarter ending August 25, reflecting a 1% decline from the previous year. However, the company does not expect this trend to continue and projects sales between $6.6 billion and $6.8 billion for the fiscal year 2025, up from over $6.4 billion in fiscal 2024.

“Lamb Weston believes in the ongoing global love for fries—closing one of our older facilities represents less than 5% of our production capacity, so this adjustment helps address the current discrepancies in supply and demand,” stated spokesperson Teresa Paulsen in a statement to YSL News.

The company, which also offers sweet potato fries, tater tots, and other potato products, lists McDonald’s as its largest client. The golden arches accounted for 14% of Lamb Weston’s revenue in fiscal 2024 and 13% in 2023, according to the company’s most recent annual SEC filings.

Smaller fry orders may continue to be favored at McDonald’s for the remainder of 2024, given that the fast-food chain plans to maintain its $5 Meal Deal option at most locations until December.

However, Werner indicated that the decline in fries consumption is not expected to last. “Consumer demand for fries remains resilient, and their significance on menus are key reasons we are confident that the global fry market will eventually rebound to its previous long-term growth trends as customer traffic improves,” he said.

Traffic at McDonald’s and Wendy’s remains robust, as per analytics firm Placer.ai, which tracks visits to restaurant locations through millions of devices and advanced analytics. Both chains have seen visitor numbers in the first nine months of 2024 that are “generally consistent with 2023 figures,” the firm noted.

Additionally, the introduction of new limited-time menu items has proven effective, as evidenced by Wendy’s experiencing a 26.4% increase in visits on October 8, the launch day of the Krabby Patty Kollab menu, compared to a typical Tuesday. Likewise, McDonald’s saw a 7.9% uptick on October 10, when the Chicken Big Mac was launched, as reported by Placer.ai.

According to Kristoffer Inton, an analyst at Morningstar, “The long-term forecast for fry demand remains steady.”

As noted by an analyst on October 7, “Fries continue to be one of the top-selling and profitable items on restaurant menus.” Additionally, he mentioned that the expansion of quick-service restaurants is likely to provide more selling opportunities in the coming years, which should boost consumption.