Jim Cramer Highlights Texas Roadhouse’s Resilience Amid Beef Crisis

Texas Roadhouse, Inc. (NASDAQ:TXRH) has recently attracted attention from financial analyst Jim Cramer, who highlighted the restaurant chain’s resilience in the face of a significant beef crisis in the United States. During a segment on CNBC on August 26, 2023, Cramer discussed the company’s performance and its commitment to maintaining customer loyalty amid rising cattle prices and dwindling herd numbers.

The discussion was sparked by the latest earnings report from Tyson Foods, which revealed that cattle herds in the U.S. are at their lowest levels in 75 years. Cramer noted that this situation is impacting the entire beef market, including Texas Roadhouse, a significant buyer of beef for its popular steak dinners priced around $11. Despite these challenges, Cramer expressed optimism about Texas Roadhouse, stating that the restaurant chain continues to see strong customer foot traffic.

In his commentary, Cramer emphasized the company’s decision to hold their prices steady, showcasing their commitment to customers. He remarked, “My charitable trust owns it, it is doing so well but what can I say, they decided to keep the price point because they are loyal to their users. And the stock was actually up four on Friday because they did indicate, listen people are still coming.”

Cramer also provided context regarding the broader cattle market, indicating that the current situation parallels the peak cattle prices seen in 2014, a time when the market eventually corrected itself. He referenced insights from seasoned market technician Carley Garner, co-founder of DeCarly Trading, who predicts a potential decline in cattle prices, suggesting that we could see prices as low as $1.25 per pound in the future.

Despite the current challenges facing Texas Roadhouse, Cramer remains confident in the stock’s potential. He stated, “After a weak quarter that Texas Roadhouse I believe is having right now, that’s the name to be in. That’s why our Charitable Trust continues to buy it.”

While investment in Texas Roadhouse presents its risks, Cramer noted that there are other sectors, particularly in artificial intelligence, that may offer even greater return potential within shorter time frames. This perspective highlights the varied investment opportunities available in today’s market, as investors weigh the stability of established companies like Texas Roadhouse against the burgeoning potential of emerging technologies.

As the beef crisis continues to unfold, Texas Roadhouse’s strategy of maintaining its price points and focusing on customer loyalty may serve as a blueprint for resilience in the restaurant sector. Investors will be watching closely to see how the company navigates these turbulent times while remaining a favorite among diners.