Jim Cramer Discussed These 11 Restaurants and Retail Stocks

3. Chipotle Mexican Grill, Inc. (NYSE:CMG)

Number of Hedge Fund Holders: 69

Cramer noted that Chipotle Mexican Grill, Inc. (NYSE:CMG) is popular because people know they can split a single meal into two, making it a cost-effective option.

“Now there are some straddlers that seem to please everybody like Costco and Chipotle, maybe that’s why their stocks have such high price-to-earnings multiples… Chipotle straddles because everyone knows you can take a Chipotle meal and split it into two. One for lunch, one for dinner.”

Chipotle (NYSE:CMG) operates a popular chain of restaurants that specialize in serving a variety of Mexican-inspired dishes. In response to inflationary pressures, it raised its menu prices for the first time in over a year. The increase, which amounted to approximately 2%, was acknowledged by the company in early December. According to Chipotle’s chief corporate affairs officer, the adjustment was made to help offset rising food costs.

The price increase was noted in an analyst report by Truist Securities, which found that 20% of the company’s surveyed locations had implemented the price hike. In addition to inflation, the company faced higher ingredient costs while addressing concerns raised by customers about shrinking portion sizes. Chipotle’s handling of portion sizes became a contentious issue after viral complaints surfaced on social media platforms like TikTok.

The company was subsequently sued in November 2024 by its shareholders, who claimed that Chipotle (NYSE:CMG) had concealed how many of its restaurants were serving smaller portions. This issue was seen as forcing the chain to spend more on ingredients and negatively impacting its stock price. It should be noted that CEO Scott Boatwright and his predecessor Brian Niccol emphasized the importance of maintaining what they referred to as “generous portions” across all Chipotle locations.

Despite the controversy, the company continues to grow as it reached a significant milestone by opening its 1,000th Chipotlane in November, a digital order pick-up lane designed to streamline the customer experience.