Menu prices are rising, and fast foodies are salty

McDonald’s French fries, once the crown jewel of fast food, are facing significant challenges, leading to a ripple effect in the industry. The supplier of these iconic fries, Lamb Weston, has responded to dwindling demand by closing a plant in Washington state, slowing production, and laying off approximately 400 workers.

Why the Decline?

Changing Fry Recipe: Many fans of McDonald’s fries lament that they haven’t tasted the same since the chain replaced beef tallow with healthier oils for frying. This switch, aimed at promoting healthier eating, has coincided with a broader decline in fast-food consumption.

Economic Pressures: Inflation and rising menu prices have contributed to an oversupply of French fries. Despite McDonald’s efforts to attract customers with value deals—like $5 meals that now come with smaller fry portions—overall demand remains sluggish. Many consumers are opting for smaller sizes or even healthier options, making it difficult for fast-food chains to move enough product to clear the oversupply.

Cultural Shift: There’s a growing trend among Americans towards healthier eating, which further impacts the appeal of traditional fast food. Comments on social media suggest that many believe McDonald’s should adapt by creating healthier menu options to cater to this changing mindset.

Impact of Minimum Wage Increases

In California, the recent increase of the minimum wage to $20 an hour for fast-food employees has raised concerns about further price hikes and decreased demand. While the Newsom administration highlighted that fast-food jobs reached record numbers in the state, research indicates a more complex reality, with seasonally adjusted data showing job declines in this sector.

Lamb Weston’s Broader Challenges

Beyond the changing consumer habits, Lamb Weston is grappling with other issues. The company faced a class-action lawsuit related to alleged securities fraud, accused of misleading shareholders regarding the costs associated with software upgrades. The lawsuit claims Lamb Weston overlooked significant problems with the implementation of its new ERP system, potentially exacerbating its operational difficulties.

As McDonald’s navigates these challenges and tries to reinvigorate its fry sales, the entire fast-food landscape may need to adapt. With evolving consumer preferences, economic pressures, and operational hurdles, both McDonald’s and its suppliers like Lamb Weston are at a crucial crossroads. The future of French fries in fast food may depend on the industry’s ability to innovate and respond to these significant shifts.