Cramer Reviews the Restaurant Sector: McDonald's in the Lead, Followed by Brinker, Darden (MCD, EAT, DRI)

Cramer reviewed the restaurant sector on last night's Mad Money, attempting to find any survivors amid the economic battlefield. Jim found three stocks which he called "the best of the best": Brinker International (NYSE: EAT), Darden Restaurants (NYSE: DRI) and, of course, McDonald's (NYSE: MCD).

Focusing on the first two, Cramer gave viewers of his CNBC show five reasons why these companies will make it through the current economic downturn, emerging on the other side even stronger.

1. restaurants will not be able to receive any TARP funds, meaning that surviving companies will get stronger as they capitalize on losses and decelerating growth at competitors.
   
2. as commodity prices have plunged, so have analyst estimates, meaning restaurants such as Brinker and Darden will once again be able to top the Street's expectations.
   
3. solid restaurants will build a stronger talent base as top managers from struggling competitors will "flock to stable companies".
   
4. media costs have declined due to the recession; Specifically, drastically lower advertising costs will benefit both Brinker and Darden
   
5. Brinker's Chili's chain and Darden's Olive Garden and Red Lobster are affordable lunch/dinner spots. To boot, both stock's valuations are becoming more appropriate.

At the same time, Cramer notes that these stocks have run recently: Darden is up 16% since a near-term low last week, while Brinker is up 41% over the same period. Cramer said he wouldn't be a buyer of these stocks right away, saying investors need to "let them come to you".

Turning to his favorite in the sector, Cramer welcomed McDonald's CEO Jim Skinner.

Despite a solid Q4 earnings report yesterday, Cramer said he has been most excited by McDonald's recent venture in the premium coffee market. Cramer noted that these products have only been introduced to about 30% of McDonald's stores, implying there is plenty of room for further growth. When Cramer asked the McDonald's exec about the venture, Skinner attributed recent declines at Starbucks (Nasdaq: SBUX) to McDonald's entering this market.

Skinner also reassured investors that McDonald's has adequate funds to continue paying its dividend, all while focusing on continuing to grow business and return value to shareholders. Concluding the segment, Cramer called McDonald's "one of the best run international companies in the world."

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