In the enduring tradition of fast-food meals, the allure of crispy french fries remains unabated. According to industry giant Lamb Weston, the “fry attachment rate” – the percentage of customers ordering fries with their meal – remains exceptionally high despite rising inflation and dwindling pandemic savings.
The Resilience of Consumer Spending
Even as average Americans face the squeeze of inflation and a less flush economy, their willingness to splurge on everyday luxuries like fries is a testament to the resilience of consumer spending.
CEO Thomas Werner of Lamb Weston, a major supplier of frozen potatoes to fast-food chains, remarked, “The fry attachment rate has stayed pretty consistent. It’s been above historical levels for the past two to three years.”
Economic Indicators
This steadfast appetite for fries aligns with other economic indicators that point to continued spending strength. March’s nonfarm payrolls report revealed an increase of 303,000 jobs, exceeding economists’ estimates and further underscoring the economy’s resilience.
Retail and food services spending in the United States surpassed 0 billion in February, a 1.5% increase from the previous year and a staggering 38.5% more than pre-pandemic levels in February 2019.
Inflation, Stimulus, and Spending
Rising wages and pandemic-era stimulus measures initially boosted spending, but mounting inflation pressures, elevated interest rates, and the cessation of these financial benefits have created financial strains for many Americans.
Despite these challenges, the purchase of french fries epitomizes a phenomenon known as “YOLO” (you only live once) or “revenge” spending, whereby consumers are opting to indulge even as economic uncertainty looms.
Slowdown Elsewhere
While the fry attachment rate suggests continued consumer spending, signs of financial stress are evident in other areas. WK Kellogg, for instance, reported that cereal is increasingly being used as a dinner alternative due to higher grocery costs.
Werner acknowledged that Lamb Weston’s sales volumes have been affected by a decline in restaurant foot traffic. “Consumers are going out to eat less often,” he said.
Lamb Weston’s financial results for the fiscal third quarter fell short of analyst expectations, causing its shares to plunge by over 19% in a single trading session.
Conclusion
The enduring popularity of french fries supports the notion that consumers remain willing to spend despite economic headwinds. However, this spending may come at the expense of other consumption areas as financial pressures mount.
Going forward, Lamb Weston and other companies will be closely monitoring consumer behavior to gauge the sustainability of current spending trends.
