Cramer's 'Mad Money' Recap: Cheap Eats

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Hungry investors should chow down on restaurant chains, where high demand and low costs have set the stage for a bull market, Jim Cramer said on his "Mad Money" show Wednesday.

In addition to their advantages in marketing and scale, chain restaurants are feasting on demographics, Cramer said. "You've got more and more dual-wage households. Nobody has time to cook and even if they did it would be cheaper and easier to go out."

Chain restaurants have become less cyclical, in part because the cost of supplies like chicken, milk and corn are falling, Cramer noted. The sector is sitting on solid real estate and isn't burdened with high labor costs.

"None of these restaurants has a problem paying high wages," Cramer said. "They're mostly terrible employers who exploit the cheap labor of their employees."

"All this cost stuff says their margins should be improving. And when margins improve, stocks go higher."

Cramer told investors to look for chains with good concepts and room to grow, and as examples he named Cheesecake Factory(CAKE Quote) and Panera Bread(PNRA Quote).

On Cheesecake Factory, Cramer touted the company's 23% revenue growth, 21% earnings growth and operating margins of 10.97%. He said that with only 103 restaurants, the chain is far from saturation.

"I've never seen a casual dining place with the kinds of lines this place has," Cramer said. "They have a great concept, which is to focus on dessert -- the only thing people actually care about."

A caller asked if health concerns could be a problem. Cramer said that while a secular trend toward more healthful food may be in place, "There's always a niche for just going and getting something that tastes great."

Even though Panera has 877 restaurants, Cramer said, it still has a lot of untapped markets. The company is putting up "remarkable" same-store sales growth (7.7% in the fourth quarter and 10% in January). While most companies either expand units or focus on same-store growth, Panera "is doing both, and that's incredible."