J.R. Simplot’s french fry pact with McDonald’s was key for company, IdahoJan 31st, 2017 | By Copydesk | Category: Featured
By Zach Kyle
In 1967, Idaho potato magnate J.R. Simplot shook hands with McDonald’s CEO Ray Kroc, sealing a deal that made Simplot the first frozen french-fry supplier to the fast-food chain. That deal brought billions of dollars to the Idaho economy.
Until then, McDonald’s had purchased only fresh potatoes. The J.R. Simplot Co. had supplied about 20 percent of the spuds that became McDonald’s fries, according to “Behind the Arches,” a 1995 book chronicling McDonald’s rise.
By convincing Kroc that frozen fries would deliver consistency and overcome a shortage of Russet Burbank potatoes in the summer — and that he could deliver — Simplot instantly became McDonald’s largest spud supplier. McDonald’s bought potatoes from other sellers as it expanded around the globe, but Simplot remains McDonald’s largest domestic potato supplier, said Dell Thornley, the chain’s director of global supply chain and sustainability.
A McDonald’s marketing video released recently offers a glimpse into the Boise company’s role without mentioning Simplot. The video features a Glenns Ferry potato farmer, Mark Noble, discussing potatoes with two McDonald’s chefs. Noble sells those potatoes to Simplot for processing into frozen fries.
Since the legendary handshake, Simplot has diversified and grown into an international agribusiness that grossed $5.8 billion in sales last year. McDonald’s remains its largest customer.
“Where we go, they go,” Thornley told the Idaho Statesman. “That’s exactly the reason Simplot is in places like China. They are really a valued partner.”
The partnership has also been profitable for the Noble family.
Allen Noble started selling Russet Burbanks to Simplot for McDonald’s for fries 54 years ago. The potato cultivar, sometimes called the Idaho Russet, is the most commonly grown potato in North America, in part because it handles processing and freezing well.
Allen Noble is still involved in Noble Farms, but today his son, Mark, 61, farms 1,500 acres of potatoes with a brother-in-law and a stepbrother. The video that features him is being shown in McDonald’s restaurants and on the company website and social-media pages.
Noble said selling to Simplot has provided welcome stability in a volatile industry.
“When you deal with somebody for a long time, you know their history, and they know yours,” he said. “It’s been very, very good to us.”
Noble said the family used to sell some of its potatoes to Ore-Ida, the frozen Tater Tot processor headquartered in Boise until 1999, as well as some to the fresh market.
“We don’t anymore,” he said. “We’re satisfied dealing with Simplot. It’s the road we chose to take.”
Noble said several of his nephews are in line to take over the farm. He expects they will keep selling to Simplot.
“We’re definitely exposing them to those relationships,” he said.
Simplot is not McDonald’s sole fry supplier. McDonald’s also buys from at least two other companies with Idaho operations.
One, McCain Foods, a Canadian company, is McDonald’s largest international potato supplier. It operates processing plants in Fruitland and Burley.
The other is Lamb Weston, which just spun off from ConAgra and established its headquarters in Eagle. Lamb Weston has processing plants in Twin Falls and American Falls that employ 1,300 people.
Simplot, McCain and Lamb Weston supply more than 70 percent of McDonald’s potatoes worldwide.
Simplot now has five plants in the U.S. making McDonald’s fries, said Keith Franzen, senior director of Simplot’s McDonald’s unit, based in Chicago. Those plants are designed to ensure that fries and hash browns are formed, precooked and delivered to look and taste the same at each restaurant.
One of those plants is in the Treasure Valley. In 2013 and 2014, Simplot laid off about 800 workers at potato processing plants in Caldwell, Nampa and American Falls and replaced the plants with a new, state-of-the-art plant in Caldwell that employs fewer people.
“Their attention to quality makes us be a better company,” Franzen said. “We worked closely with McDonald’s throughout the process in Caldwell. They were on-site and with us as we brought the plant online.”
Thornley, a Blackfoot native, worked as a Simplot agronomist for four years in the 1980s. After working with McDonald’s to develop a potato supply chain in Turkey, Thornley took his current position at McDonald’s making sure its restaurants in Europe have all of the spuds they need.
McDonald’s has long valued stable, longtime partners like Simplot, Thornley said.
“We have partners in the beef and bakery categories that go back to Ray Kroc,” he said. “Some of those relationships are going through their second and third generations.”
McDonald’s calls Russet Burbanks the “gold standard variety” for fries, but it has adopted nine other varieties overseas where Russets don’t grow as well, Thornley said. And breeders in Idaho, Washington and Oregon are working on new high-yield varieties called Clearwater, Umatilla and Ranger.
“Even in the Pacific Northwest, the Russet Burbank is not the easiest potato to get growing, and it has some weaknesses to it,” Thornley said.
Franzen said Simplot’s relationship with McDonald’s will enrich Idaho for years to come.
“I see nothing but upside for the J.R. Simplot Co. and Idaho,” he said. “We’ve continued to be able to grow together and work on new products and projects. I don’t see that changing in the future.”