McDonald's largest french fry supplier Lamb Weston closes factory

That means fewer Americans want large fries, which the company's CEO says has led McDonald's largest french fry supplier to close a production plant and cut costs.

Idaho-based Lamb Weston, the largest french fry maker in North America, announced a restructuring plan on Oct. 1 that called for the immediate closure of a production facility in Connell, Washington, and the reduction of 4% of its workforce, according to a news release. According to NBC Washington affiliate NBC Right Now, the plant closure laid off approximately 375 employees.

“Lamb Weston is confident that the world continues to love French fries – the closure of one of our older facilities represents less than 5% of our production capacity, so this adjustment only helps address a current imbalance between supply and demand,” said Lamb Weston Spokeswoman Teresa Paulsen said in a statement to TODAY.com.

The cost cutting comes at a time when many major fast-food chains have created meal deals to boost demand after rising prices turned off customers and led to less foot traffic. McDonald's announced a $5 meal deal in May that includes four items: the choice of a McChicken or McDouble, a four-piece chicken nugget, french fries and a drink.

In September, the fast food giant announced that the deal would remain in place until the end of the year. McDonald's, which accounts for 13% of Lamb Weston's sales, did not immediately respond to TODAY.com's request for comment.

Popeye's, Pizza Hut, Taco Bell, Wendy's and Burger King have also created promotional offers. Thomas Werner, president and CEO of Lamb Weston, said offerings from various fast-food chains have led to a decline in volume for the french fry provider.

“In many of these meal promotions, consumers are switching from a medium to a small fry,” Werner said in an Oct. 2 earnings call, “a partial headwind to our volumes.”

Werner also said demand is sluggish at a time when Lamb Weston is oversupplied. The company said net sales fell 1% and net profit fell 46% compared to the same quarter last year.

“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 in a statement in the release.

Lamb Weston shares have fallen 35% since the beginning of the year.

McDonald's reported in July that sales fell 0.7% in the quarter and foot traffic fell at its U.S. locations, a year after a 10.3% increase in sales due to the popularity of the Grimace birthday meal.

“Ultimately, we expect that customers will continue to feel the economic slowdown and higher cost of living in this very competitive environment for at least the next few quarters,” McDonald's U.S. President Joe Erlinger said on the company's earnings call, according to CNBC .