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Chipotle Mexican Grill (NYSE: CMG) has been an unbelievable market-beater since its IPO in 2006.
As you can see from the chart below, the stock is up more than 5,000%, turning $1,000 into $50,000 during that time.
Chipotle pioneered the fast-casual concept, and it's been executed to near perfection, with the exception of a few years when its performance was marred by the E. coli scandal.
Today, Chipotle stock remains expensive at a price-to-earnings ratio of 46, which may be scaring some investors, but the stock can continue to outperform the market.
Same-store sales will keep growing
Same-store sales are the bread and butter of any restaurant chain, and Chipotle has consistently grown comparable sales throughout its history. Doing so allows it to grow revenue without opening new stores, and it increases margins since that added revenue is coming without the need for new real estate and additional rent.
Comparable sales jumped 7.4% in 2024, and with digital, delivery, and drive-thru available, the revenue ceiling is high for an individual Chipotle restaurant. The company is no longer constrained by throughput. It can serve customers in myriad ways and can fill those orders as long as the kitchen staff is sufficient.
In addition to growing individual transactions, the company can also increase same-store sales through price increases, and it has shown several times before that it has pricing power.
Its restaurant opening target will increase
Chipotle is currently targeting 7,000 restaurants in North America, about double the 3,726 it finished the year with.
That might make it seem like the company has limited room for growth, but it will almost certainly raise that target as it grows, especially as recent innovations like the Chipotlane (drive-thru) mean it can profitably operate stores in areas such as an interstate exit, where it might not have made sense earlier.
There are more than 14,000 McDonald's in the U.S., and Chipotle's average unit volumes are similar to McDonald's. Expect the burrito chain to open 10,000 or more locations over the long term, driving the stock higher.
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