Demand for French fries displays client resilience because the so-called French fry attachment fee stays secure

A McDonald's crew member prepares french fries in Miami, Florida.

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It's a timeless question at fast food counters: Do you want fries with that?

According to a leading potato supplier, respondents continue to answer “yes” at an above-average rate. It underscores the resilience of consumer spending even as inflation squeezes wallets and savings dry up due to the pandemic.

A larger proportion of customers are continuing to add the iconic side dish to their meal orders than in the past, according to a frozen potato supplier Lamb Weston. Looking at the bigger picture, the strength of the so-called fry attachment rate supports economic data and shows the average American's willingness to still spend on everyday luxuries.

“The breeding rate has remained fairly consistent,” CEO Thomas Werner said during the company’s earnings call Thursday. “It has been above historical levels for two or three years.”

This is just one example of how consumers continue to buy even though there are increasing reasons to go easy on their wallets – a phenomenon that puzzles economists.

Retail and food services spending in America topped $700 billion in February, according to preliminary and adjusted government figures. That is around 1.5% more than in the same month last year. And it's a whopping 38.5% more than in February 2019.

Rising wages and fiscal stimulus padded bank accounts and led to increased purchases in the early years of the Covid-19 crisis. But in recent years, U.S. consumers have come under increasing pressure due to soaring inflation, elevated interest rates and the end of pandemic-era financial benefits.

And experts have been surprised by Americans' unwavering willingness to use their cash, even as consumer confidence wanes and fears of an economic downturn grow. The decision to add french fries is a case study in what some call “YOLO” or “revenge” spending, the former term named after the acronym for “You Only Live Once.”

Deceleration elsewhere

There are certainly signs of financial stress among consumers that is impacting financial decisions around food. WK Kellogg CEO Gary Pilnick told CNBC earlier this year that cereal was trending as a dinner alternative as shoppers grappled with higher grocery costs.

Although customers are still opting for fries, Werner said Lamb Weston's volume has still suffered a decline due to lower overall foot traffic at the restaurants it serves. This decline is due to consumers becoming increasingly accustomed to higher menu item prices due to inflation, the CEO said. (Lamb Weston supplies potatoes for major chains like MC Donalds and Chick-fil-A, although Werner did not elaborate on which companies are seeing a slowdown.)

“On the one hand, fries are still popular with consumers,” said Werner. “On the other hand, consumers are eating out less often.”

Lamb Weston on Thursday reported adjusted earnings and revenue for its fiscal third quarter that were below estimates from analysts surveyed by FactSet. The Idaho-based company's outlook for full-year performance on both financial metrics also fell short of Wall Street forecasts.

Shares fell more than 19% in Thursday's session, hitting lows not seen in more than a year.

Correction: This article has been updated to remove an inaccurate reference to the timing of the Covid pandemic. This article has also been updated with the correct spelling of Chick-fil-A.

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