It may sound like an exaggeration, but when we talk about the economy and the stock market, frozen french fries are more than just a more or less healthy side dish. They are also a multi-million dollar business. And an interesting economic indicator in its own right. This is a company that is one of the giants of the industry, operating in over a hundred countries and operating popular brands such as McDonald’s and Yum! Brands, KFC, Pizza Hut and Taco Bell.

Lam Weston closed what he called a “disappointing” quarter and faces a “challenging” 2025, to say the least. Beyond that, his case tells us the following: fast food.And our habits.

28 percent collapseThat’s the decline in shares of giant Lamb Weston on Wednesday after the company reported its results for the fourth quarter of 2024. The data was released. Five daysThis means that the company is still down 2% at the close of European stock exchanges, despite the initial decline having eased on Thursday. This percentage further worsens the multinational’s recent run. Charts on the Investing.com platform show that at the beginning of this year, the titles were comfortably above $100, but today and after the “sink” in recent weeks, they have not reached 60.

Net sales in the fourth quarter were down 5% year-over-year, net income was down 74% and adjusted EBIDTA was down 14%, but operating income was up 15%. The “big picture” for fiscal 2024 as a whole is more positive, with net sales and operating income growth rates of 21%. Globally, net income was down 28% year-over-year, leaving a profit of approximately $725.5 million.

“Disappointed”The decline in the last few hours came after the multinational reported last-quarter figures that were less than flat, leaving expectations for 2025 at least cautious. “We were disappointed with the fourth-quarter results,” said Tom Werner, the company’s chairman and CEO.

Results for the quarter fell “below expectations,” with the company citing “loss of share” and a “slowdown” in its restaurant operations in the U.S. and other international markets.

Scene changeWerner’s analysis is interesting both for its balance in recent months and, above all, for its expectations for 2025. The director assumes that the year will be “challenging” and points to a change of scenario in which the direct customer flow will be lower in the plant.

“The operating environment has changed rapidly over the past twelve months as overall restaurant flow and frozen potato demand softened as menu price inflation continued to negatively impact global restaurant activity,” he notes.

Werner predicts that the “imbalance” between supply and demand will likely continue “through most, if not all, of fiscal 2025,” and suggests that the company he runs is already making “some short-term operational adjustments” to adapt. Among other actions, he cites “scaling back” investment, “decisive measures” in terms of costs, and measures for productivity and the supply chain. The company expects revenues of 6,600 million to 6,800 million by 2025, and EBITDA of 1,340 million to 1,480 million, slightly below the 1,630 expected by the market.

But… are we eating out less? In its analysis, the company points to a “change in the operating environment” and a “softening” in demand, directly linked to the increase in prices. A report published in April by NielsenIQ in Spain showed that demand for drinks in restaurants, hotels, bars and cafes is projected to shrink by 1.4% in 2023, the first decline since the pandemic.

A recent study by Kantar Worldpanel provided equally revealing data: a 2% decrease in consumption outside the home by 2023. This suggests that, at least last year, we Spaniards went out to eat less in restaurants.

“The figures show a consumer who is eating out less and going out more deliberately, experiencing every outing as a special moment to be enjoyed as a couple, family or friends,” Kantar said at the time. The declines in domestic consumption coincide with a prolonged period of inflation, with annual inflation of 5.4% in 2022 and 3.1% last year.

The reflection within fast food. Although there are companies that deal with this fast food Lamb Weston, which has a solid bottom line like Brinker or Chipotle Mexican, isn’t the only company in the industry that could use a better balance sheet. Despite the recent recovery of Wendy’s and Jack in the Boxo Dine Brands, Papa John’s stock is also down significantly so far in 2024. They all have French fries on their menus.

Five days Lamb notes that McDonald’s shares have also fallen since Weston presented its latest results (they are down 14.7% on the stock market so far this year) and that the S&P 1500 Restaurant Index is key to understanding the sector. fast food 9% of North Americans remain.

Image by Emmy Smith (Unsplash)

At Xataka | AI is not yet ready to understand our food orders. A giant like McDonald’s has proven this