Contract Dispute Causes French Fry Shortage At McDonald’s Corporation (MCD)

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french fries MCD

There is a shortage of French fries supply to more than 100 McDonald’s Corporation (NYSE:MCD) franchises in Venezuela. The company has blamed the shortage on a contract dispute with the dock workers at the West Coast. However, some have read politics in the whole matter because Venezuelan neighbors are not suffering the same impact.

Disappointed customers

Customers coming to McDonald’s Corporation (NYSE:MCD) stores in Venezuela for French fries are walking away empty-handed or forced to settle for the alternatives. However, the problem with the available alternative such as yuca or cassava fries is that they are too starchy. The problem in the supply of frozen potatoes to McDonald’s Corporation (NYSE:MCD) stores in Venezuela has been around for a while.

At the time when McDonald’s Corporation (NYSE:MCD) is facing frozen potatoes supply constraints, rival restaurants are wooing customers to their side, mocking the stores that still offer American-style fries.

The problem with dock workers also recently caused a shortage of frozen potato supply to Japan, where restaurants had to ration French fries for a number of days.

Venezuelan government to blame?

Although McDonald’s Corporation (NYSE:MCD) maintains that port issues are to blame for the shortage of French fries in Venezuela, it is hard-pressed to explain why neighboring countries are not facing a similar shortage. Therefore, some hold that the socialist government of Venezuela may be to blame for the current scarcity of frozen potatoes. Venezuela has a tight currency control.

Import decline

It is also reported that McDonald’s Corporation (NYSE:MCD)’s Venezuela potato suppliers imported fewer potatoes last year than the previous one, according to the officials at the U.S. Potato Board. It is said that import of potatoes by the suppliers fell 14% from the previous year, which could also explain the current scarcity.

Neha Gupta

Neha Gupta has been in the financial space for over six years now. Gupta earned her MBA degree from Symbiosis Centre of Distance Learning in 2009 and her passion for finance led her to pursue Chartered Financial Analyst (CFA) course. She has successfully completed Level II of her CFA. She is a veteran in article writing, which is depicted in her numerous pieces published on SeekingAlpha, Nextiphonenews, InsiderMonkey, MarketWatch, and Techinsider. Her crisp and eloquent writing finds its best place in Researchcows, where emphasis is given on developing rich content for various websites, products, business plans, trainings, and book writing.

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