Value-Meal Buyers Are Getting Fewer Fries With That
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Key TakeawaysFrozen potato-products maker Lamb Weston's CEO said Wednesday that there was “early evidence” of improving restaurant traffic in the summer months.But some value-meal offers, Lamb Weston's CEO said, include french-fry portions that were smaller than consumers might have ordered before.That trend has been a headwind for the potato-products supplier as it looks for signs that restaurant traffic is picking up.
Fast-food value meals have been credited with helping get inflation-weary diners back into their favorite chains. But there’s a dark side, it appears—at least, if you’re a company that supplies those chains with potato products: Fewer fries are arriving with those orders. Lamb Weston Holdings (LW), which on Wednesday reported its latest financial results along with plans for a broad restructuring and a scaled-back outlook, said that its customers' restaurant traffic has been—and is expected to remain—under pressure. That sentiment has been echoed by other food suppliers lately, including Hunt’s ketchup owner ConAgra Brands (CAG) and spice giant McCormick (MKC). Customers Seen Responding to PromotionsLamb Weston Chief Executive Officer (CEO) Tom Werner said Wednesday that there was “early evidence” of improving restaurant traffic in the summer months, with customers responding to promotions and, perhaps, getting used to higher prices. Demand for fries isn’t dropping, Werner said, with the rate at which people add them to orders “steady” in the company’s key markets. But some promotional value-meal offers, Werner said, include french-fry portions that are smaller than consumers might have ordered before.“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 said on the earnings call, a transcript of which was made available by AlphaSense. ”So, while we benefit from improving traffic trends, consumers trading down in serving size acts as a partial headwinds for our volumes.” Read the original article on Investopedia.
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