Jim Cramer Weighed in on Shake Shack in Light of Rising Food Costs

Shake Shack Inc. (NYSE:SHAK) is one of the stocks Jim Cramer put under the spotlight. Cramer discussed the company in light of the current state of the consumers. He commented:

“Today, we got a lot of research about how the consumer’s in terrible shape. I saw notes about how Shake Shack and Papa John’s may be too expensive for some people. I’ve been a big fan of Shake Shack stock. I was surprised to learn that customers are being hurt by the price of beef in a softer economy.”

Stock market reports printed on a sheet of paper. Photo by RDNE Stock Project on Pexels

Shake Shack Inc. (NYSE:SHAK) operates and licenses a chain of restaurants serving burgers, chicken, hot dogs, fries, shakes, frozen custard, and beverages. Cramer discussed the stock during the August 4 episode and said:

“During earnings season, when a stock comes in maybe too hot, even a good quarter might not be enough to prevent it from pulling back. Take Shake Shack, iconic burger chain. Last Thursday morning, the company reported a pretty clean top and bottom line beat with its highest restaurant level margins in six years, which is what I care about. Yet some people thought there was a fly in the ointment. Shake’s same-store sales grew at just 1.8%. Analysts were looking for 2.2%. Give me a break.

That’s hardly the end of the world, but given that the stock was up 60% from where it was trading when they reported the previous quarter, clearly expectations were high and there wasn’t much margin for error there. We had to be careful, but that’s why the stock plunged almost 15% on Thursday and fell another 7% on Friday before rebounding more than 3% today.”

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Disclosure: None. This article is originally published at Insider Monkey.