Chipotle Mexican Grill (CMG 0.17%) is thriving as economies reopen and business restrictions are removed. Dining inside restaurants was temporarily banned at the pandemic's onset, but now that billions of people have been vaccinated against COVID-19, governments have allowed restaurants to welcome patrons inside. That's excellent news for Chipotle, boosting the average sales generated per restaurant. 

The green flag: rising sales per restaurant 

In its most recent quarter, which ended on March 31, Chipotle reported average restaurant sales of $2.68 million. That was meaningfully higher than the $2.3 million in average restaurant sales it earned in the same quarter of the prior year, and it eclipsed the $2.5 million long-term goal that management targeted several years ago.

With that milestone reached and momentum riding high, management is confident it can surpass $3 million in average per restaurant sales in the near future. That would be crucial in lifting the company's overall revenue, which totaled $7.5 billion in its most recently completed fiscal year, a 26% increase from the prior year. 

CMG Revenue (Annual) Chart

CMG Revenue (Annual) data by YCharts

Chipotle has bold ambitions in that regard as well. The company predicts it can comfortably grow to reach 7,000 stores in North America. That would represent a considerable increase from the 3,014 locations in operation as of March 31. Rising sales per restaurant and expanding location counts could work together as a powerful force in sales growth.

Indeed, if Chipotle can reach its goal of 7,000 locations at over $3 million in average sales per location, it could potentially boost revenue to $21 billion annually. That's nearly triple the $7.5 billion revenue that Chipotle earned in 2021. 

No rush to buy Chipotle stock

CMG Price to Free Cash Flow Chart

CMG Price to Free Cash Flow data by YCharts

Chipotle has excellent prospects as consumers appreciate its menu. That said, the potential is no secret, and the market has bid up Chipotle's stock to expensive valuations. Chipotle is trading at a price-to-earnings ratio of 47, which, even though it represents a significant decrease from the company's high, is still expensive relative to the valuations of its restaurant peers McDonald's (MCD 0.38%) and Domino's Pizza (DPZ -0.08%)

Admittedly, Chipotle is growing its top line faster than its peers, but Domino's has proven much better at increasing earnings over the past decade compared to Chipotle. Given its relatively expensive valuation, investors need not rush to buy Chipotle stock. Instead, put Chipotle on your watch lists and wait for a pullback before acquiring shares.