Bidenomics: McDonald's French fries manufacturer closes one of its plants, lays off hundreds

Lamb Weston Holdings, the country's largest producer of French fries that supplies chains such as McDonald's, will close its plant in Washington state and lay off at least 4% of its global workforce. The information was confirmed in a recent earnings report in which it was detailed that sales have weakened in recent months and therefore the company decided to implement a restructuring plan.

"Key actions include closing Connell, Washington facility, temporarily curtailing production lines and schedules in North America, reducing approximately 4% of global workforce, and eliminating unfilled job positions," the report explained.

Lamb Weston Holdings, Inc., President and CEO Tom Werner highlighted that although sales were within the companies' expectations, he does not believe there will be sales growth in fiscal year 2025.

"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. ... However, 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," Werner said in the statement.

In that regard, Werner explained that to drive operational and cost efficiency, they are taking steps that include permanently shutting down their oldest and highest-cost processing plant and temporarily reducing certain production lines and schedules in their manufacturing network.

"These actions are proactive steps designed to improve our operating efficiency, profitability and cash flows, while also positioning us to continue to make strategic investments to support our customers and create value for our stakeholders over the long-term," Werner said.

The report detailed that the company's net sales were down 1% from the same quarter last year. Volume declined 3%, largely reflecting the impact of customer share losses and weak restaurant traffic trends.

The situation comes at a time when Americans are feeling rising inflation in their day-to-day lives, which is affecting the fast-food industry. According to data obtained by the Star Tribune, eating out increased 30% on average since 2019. For example, a medium-sized order of French fries in 2019 cost $1.79 and currently is priced at $4.79. This represents an increase of over 167%.

This is a significant increase in the cost of eating out. In fact, it is a situation that is worrying businesses due to the low influx of customers. Some fast food chains have started to offer deals to try to recover revenue.

This is the case of McDonald's, which announced that it would add a $5 value menu. Wendy's responded with a $3 breakfast offer.

In a statement, House Republicans blamed the Democratic administration for the economic situation.

"Bidenflation is a tax on ALL Americans, and it has skyrocketed because of Joe Biden and Far Left Democrats’ reckless spending. House Republicans are fighting to rein in their out-of-control spending and drive down costs for Americans," party members in a statement posted on the GOP's official website.