McDonald's is out with a warning on the health of consumers, and not just the physical health.
The fast food sector is first to feel the pinch when money is tight and that's what is happening now, according to an exec on today's post-earnings call. An exec said that the quick-serve sector 'meaningfully' slowed in a majority of the markets that it serves, including the US, Australia, Canada and Germany.
They also said the weakness in the low-end consumer has "deepend and broadened" and that sales fell globally for the first time in more than three years. Global comp sales were down 1% in Q2 compared to +0.5% expected by analysts. US sales fell 0.7% in Q2.
They company said they expect consumers will continue to feel the pinch of the economy for 'at least the next several quarters' and noted that the landscape was 'very competitive'.
McDonald's rolled out $5 meals recently as it tries to fight back on the perception that its food is too expensive and the company said the meals sold above expectations.
Shares of the company are up 1% pre-market but are down 16% since January. I take this is a strong signal about a slowing economy.