Lamb Weston Navigates QSR Decline with Focus on In-Home Growth
Persistent softness in the foodservice sector, particularly within the quick-service restaurant (QSR) category, continued to pressure Lamb Weston Holdings Inc. during the third quarter of fiscal 2025. Despite flat year-over-year earnings, the potato products giant reaffirmed its full-year guidance and is pursuing new growth opportunities in the retail space.
For the quarter ended February 23, Lamb Weston reported net income of $146 million, or $1.03 per share, matching last year’s result of $146.1 million, or $1.01 per share. Quarterly sales rose to $1.52 billion from $1.46 billion in the prior-year period.
“In the United States, QSR traffic declined 2% when compared to the same period of the previous year, and at QSR chains specializing in hamburgers, traffic was down 6%,” said Bernadette Madarieta, Chief Financial Officer. “As a reminder, about 85% of our North American sales are from food-away-from-home channels, and the majority of that volume is sold through QSRs.”
To manage the downturn, the company is continuing to streamline operations, having initiated a restructuring plan last October that included the closure of its Connell, Washington facility, production reductions at other plants, and a 4% cut in global headcount.
“While we do not anticipate a near-term improvement in the demand environment, we are controlling what we can control,” said Mike Smith, President and CEO. “We are focusing on gaining share, driving growth with existing customers, winning new customers, and operating with excellence.”
Smith pointed to macroeconomic pressures and consumer uncertainty as key drivers of the ongoing softness in QSR traffic. However, he emphasized Lamb Weston’s flexibility in adjusting sourcing and production levels as needed. “We’re taking all those demand signals into account … and also have the flexibility should things turn around to bring those lines and facilities back on,” he added.
In North America, the company’s largest segment, net sales rose 4% to $986 million. Volume increased 8%, while price/mix declined by 4%, reflecting pricing adjustments and promotional activity. International sales rose 5% to $301 million from $286 million.
Looking beyond foodservice, Lamb Weston is increasingly shifting its innovation focus to in-home consumption. The company has launched a number of new retail products, including battered and seasoned fries and tots designed for extended refrigerated storage, as well as private label offerings in grocery and club channels.
“In our North America retail channel, we’ve expanded our licensed brand portfolio to include onion rings and cheesy potato bites,” Smith said. “Internationally, we launched a reimagined classic fry—the three-sided frenzy fries—and are receiving very positive feedback and demand signals.”
Despite the ongoing headwinds, Lamb Weston reaffirmed its full-year guidance, projecting net sales between $6.35 billion and $6.45 billion, and net income of $440 million to $460 million.
