Fast-food value meals have been a huge hit among consumers, giving impetus to chains struggling with inflation blues. But this trend doesn't bode well for all - potato product suppliers supplying these chains are witnessing a drop in french-fry servings. Lamb Weston Holdings, which recently announced intriguing financial statistics and large-scale restructuring plans, indicated that the restaurant traffic of its clientele remains under pressure and this might continue.
This concern is not unique to Lamb Weston; other food suppliers including Hunt’s ketchup owner ConAgra Brands and spice king McCormick have shared similar sentiment. However, Lamb Weston CEO, Tom Werner, on Wednesday shared anecdotal evidence of improving restauraunt traffic during summer. He argued that fries' demand remains steady, and consumers might be adapting to inflated prices, but value meals bring smaller french-fry serve, impacting their volumes negatively.
"We’re obviously pleased with the growth in restaurant traffic, but 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 pointed out during the earnings call. "So, while we benefit from improving traffic trends, consumers trading down in serving size acts as a partial headwinds for our volumes.”