The company believes it can double its North American footprint to 7,000 locations.
At first glance, one could easily assume they missed the boat with Chipotle (CMG 2.26%). The fast-casual restaurant chain surged following the announcement of its 50-for-1 stock split. Additionally, the stock is up more than 120-fold since launching its IPO at a split-adjusted $0.44 per share in 2006.
Still, its footprint of more than 3,500 locations likely does not mean the stock is done growing yet. Here’s how investors can still profit despite the chain’s massive growth.
Why Chipotle
Chipotle has stood out by successfully pioneering a healthy fast-food concept. The company has figured out how to offer delicious, reasonably priced fast food produced naturally, a concept that most other chains have struggled to cope with as successfully.
An additional benefit is that Chipotle has succeeded in areas with populations below 40,000 people. That gives the company the ability to meet its expectation that it can grow to 7,000 locations in North America alone.
Moreover, it has not had to sacrifice growth to achieve this goal. In the second quarter of 2024, it announced it had added 262 restaurants over the trailing 12 months, meaning it will take several more years of growing at the current rate to reach 7,000 locations.
Additionally, its strong financials point to continued prosperity. In the first half of 2024, revenue of $5.7 billion rose 16%. Also, comparable-store sales rose 7% in Q1 and 11% in Q2, indicating that it is maintaining growth in a sluggish economy. Such an increase led to $815 million in net income for the first two quarters of 2024, a 29% yearly rise.
Finally, its European growth story has barely begun. So far, only 27 locations exist across the U.K., France, and Germany. Nonetheless, McDonald’s operates over 40,000 globally, indicating how far a restaurant stock can go by succeeding internationally.
Ultimately, Chipotle has come a long way. However, considering its comparable-store sales growth, expanding footprint, and international prospects, Chipotle may have only begun to unwrap its full potential.
Will Healy has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Chipotle Mexican Grill. The Motley Fool recommends the following options: short September 2024 $52 puts on Chipotle Mexican Grill. The Motley Fool has a disclosure policy.
