Many retail restaurants have provided some lofty returns over the years and if inflation continues to ease a few of these companies may be beneficiaries of a stronger consumer.  

Let’s take a look at three retail restaurants investors may want to consider for 2023 and beyond.

Chipotle Mexican Grill CMG

Starting the list is Chipotle, and its lofty stock price is an indication of the company’s immense popularity. The operator of Mexican food restaurant chains has produced incredible returns for investors.

In the past year, CMG’s price return has been virtually flat to outperform the S&P 500’s -16% decline and roughly match the Retail-Food & Restaurants Markets +1%. Even better, over the last decade CMG’s very stellar +412% has crushed the benchmark’s +167% and its Zacks Subindustry’s +133%.

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Chipotle’s shares currently trade at $1,512 per share and 34.7X forward earnings. This is above the industry average of 21.7X but Chipotle is a proven industry leader. Plus, Chipotle stock trades well below its decade high of 231.6X and at a 30% discount to the median of 49.6X.

With Chipotle trading attractively relative to its past the stock currently lands a Zacks Rank #3 (Hold) with its bottom line growth starting to stick out again as well. Chipotle’s earnings are now expected to climb 31% for its fiscal 2022 and jump another 28% in FY23 at $42.63 per share. Earnings estimates revisions have slightly gone up for both FY22 and FY23 over the last 90 days.

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McDonald’s MCD

Another leader among fast-food restaurants that investors may want to consider adding to their portfolio in 2023 is McDonald’s. The famous burger chain has also provided strong historical returns.

Amid higher inflation, McDonald’s affordable pricing has led to its stock acting as a defensive hedge against inflation. Over the last year, MCD stock is up +2% as the S&P 500 dropped and this slightly edges the Retail-Food & Restaurants Markets +1%. Looking at the last decade, MCD’s +190% also beats the benchmark's +167% and its Zacks Subindustry.

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Trading around $266, shares of McDonald’s trade at 25.7X forward earnings which is slightly above the industry average of 21.7X. But of course, McDonald’s is a historical industry leader and trades nicely below its decade high of 38.3X and closer to the median of 22.7X.

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McDonald’s stock currently sports a Zacks Rank #2 (Buy) with earnings estimate revisions continuing to trend higher over the last week. Fiscal 2022 earnings are now expected to be up 7% and rise another 5% in FY23 at $10.45 a share. In addition to this, McDonald’s stock also provides a very generous 2.2% annual dividend yield.