The group is proposing to close its Knighton manufacturing site in Staffordshire, which it said was “marginally” loss-making. The move will impact about 300 jobs.
Councillor Mark Whittle, mayor of Market Drayton Town Council, said the decision would have knock-on repercussions.
"I know there will be people in our town who work there and my heart goes out to any families threatened with the prospect of losing their job," he said.
"This is a rural area and these jobs are essential and once these jobs go, people within a five-mile radius of that factory are going to be impacted.
"You have the knock-on effect on the whole area because it means some families will have even less money to spend in shops and in the community as a whole.
"It's just very sad to hear and it's a kick in the teeth for those who may be affected and a body blow for the area."
Newport councillor Peter Scott said the news would also impact on his town and added: "Job losses are something no-one wants to see.
"The factory has been there and long time and it will have a big effect on the area.
"It's not a good time for anyone to lose there job and I just hope that something can be worked out to keep as many people in work as possible.
"I have sympathy for anyone under threat of losing their job."
Staffordshire County Council’s deputy leader and cabinet member for economy and skills Philip White said:
“This is devastating news for all concerned and with so many jobs at risk a real blow to local communities. The county council will work with partners including the borough council and DWP to ensure those affected have the support they need at this difficult time.
“The partnership will contact the company to discuss next steps and set out the free support services available to those employees affected. These include our recently launched Staffordshire Jobs and Careers brokerage service, where our team of expert brokers will be on hand to match people with training and employment opportunities locally, of which there are many across the county.”
Premier Foods said it was launching a consultation with the 300 workers at the factory under a process that will run to the middle of 2023.
But the site, which largely makes unbranded powdered drinks for the group, is likely to continue operating into 2024 before finally shutting after a phased closure.