McDonald's french fry supplier is suddenly closing its factory and cutting jobs at an alarming rate

A major McDonald's french fry supplier cut jobs and abruptly closed a factory because cash-strapped fast-food customers cut down on their meals or skipped the side dish altogether because of the inflated prices.

To combat declining sales, the fast-food giant launched a $5 meal deal this summer that includes a McDouble or McChicken, a four-piece nugget, small fries and a small fountain drink.

Competitors such as Burger King and Wendy's offered similar offerings, most with small fries.

However, according to the CEO of Lamb Weston, the largest french fry maker in North America, the popularity of the inexpensive meals has led to a decline in overall demand for french fries.

“A lot of these meal specials involve consumers switching from medium fries to small fries,” said Tom Werner, whose company supplies about 80% of the french fries sold at fast-food restaurants in the United States.

However, inflation-hit consumers have sharply cut back on spending at fast-food restaurants and many have opted to cook at home.

Those who eat out have seen menu prices rise, particularly in California, after the state implemented a $20 an hour minimum wage for fast food workers on April 1.

McDonald's U.S. same-store sales fell 0.7% in its most recent quarter compared to the same period last year.

The burger-and-fries company is Lamb Weston's largest customer. Trouble for the Golden Arches means trouble for Lamb Weston.

Although Lamb Weston also supplies upscale restaurants and grocery stores, it relies heavily on its fast food business.

Shares of Lamb Weston are down nearly 35% this year.

Last week, Lamb Weston announced that it would cut 4% of its global workforce and curtail production lines following a dismal earnings report, as first reported by CNN.

The Eagle, Idaho-based company briefly closed a plant in Connell, Washington – resulting in the loss of 375 jobs, according to NBC NonStop Local.

“Restaurant traffic and demand for frozen potatoes continue to be weak relative to supply, and we expect them to remain weak through the end of fiscal 2025,” Werner said during an earnings conference call.

“Together, we expect these actions will help us better manage the utilization of our factories and alleviate some of the current imbalance between supply and demand in North America.”

The french fry maker's net sales fell 1%, its operating income fell 34% and its net income fell 46% compared to the same period last year.

Lamb Weston did not immediately respond to requests for comment.