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Consumers are still indulging in the classic choice of adding fries to their meals. This trend can have a positive impact on the economy.
According to CEO Tom Werner, Lamb Weston Holdings, a supplier of frozen potatoes, has observed that the fry attachment rate, which refers to the percentage of consumers ordering fries with fast food meals, remains higher than pre-pandemic levels. This could suggest that consumers are resilient despite inflation and recession concerns.
Werner stated, “The global frozen potato category continues to have stable demand and supply. The fry attachment rate, which indicates the rate at which consumers order fries when visiting restaurants or other food service outlets in our key markets, has remained consistently high, even surpassing pre-pandemic levels.”
During times of financial strain, consumers often curtail their spending habits by opting for cheaper brands or cutting unnecessary expenses. In the case of Lamb Weston and fast food chains, this might translate to customers forgoing fries or other side orders to manage their budgets.
Inflation can affect businesses in various ways, not just through fry sales. Although Lamb Weston observed little change in total traffic in key U.S. markets, there was evidence of a shift in consumer behavior. The growth in affordable quick-service food providers counterbalanced declines seen in full-service and casual-dining restaurants.
Werner also mentioned that inflation continues to drive up costs for the company, particularly in relation to potato contract prices.
He highlighted June as a period of weakness in restaurant traffic during the fourth fiscal quarter. However, Werner expressed confidence in the company’s ability to weather an economic slowdown, citing the resilience of their potato offerings.
Werner stated, “We anticipate volatile trends in restaurant traffic in the near term due to high interest rates, inflation, and ongoing uncertainty affecting consumers. Nevertheless, frozen potato demand has proven its resilience during challenging economic times, and we remain optimistic about the long-term growth prospects of the global category.”
Lamb Weston stock experienced a significant jump of over 9% during Thursday’s trading session. Since the beginning of the year, the stock has performed relatively well, with an increase of approximately 11%.
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