Chipotle Mexican Grill (CMG 2.41%) shares have skyrocketed 380% since July 2018, absolutely crushing the 78% gain (with dividends reinvested) of the S&P 500. Even tech giant Apple, which is up 311% during the same time, has lagged the Tex-Mex specialist. 

Chipotle has obviously been a fantastic stock to own in recent years, but investors care what the future holds. Let's try and figure out what the next five years might look like for this booming restaurant business. 

A larger store footprint 

The most important aspect of Chipotle's impressive performance has been that the company continues to open stores at an aggressive pace. It opened 236 new stores in 2022 and 41 through the first three months of this year, bringing the total to 3,224 today. Just five years ago, after the first quarter of 2018, there were 2,441 Chipotle locations. So growth has been brisk. 

Management believes that the footprint will expand at an annual pace of roughly 8% to 10% for the "foreseeable future." For 2023, they expect to open 255 to 285 new stores. And over the very long term, executives are confident there will be 7,000 locations in North America. This is up from a prior target of 6,000. This estimate doesn't include other possible markets, most notably Europe, where Chipotle currently has 13 restaurants in the London area. 

With more stores, and the ongoing trend of generating more revenue per store, Chipotle is poised to boost its overall revenue. Wall Street analysts believe the business can increase its sales at a compound annual rate of 13.3% between 2022 and 2027.  

Growing profitability 

As Chipotle has gotten larger with greater revenue, its profitability has also improved, generating an operating margin of 13.4% in 2022, compared to an operating margin of 6% in 2017. More recently, the company's restaurant-level operating margin, which excludes certain corporate overhead costs, jumped to 25.6% in Q1 2023. 

Chipotle benefits from economies of scale. This means that as it gets bigger, it can better leverage fixed costs like rent and salaries, leading to expanded margins. Moreover, investments made to boost efficiencies -- like its tech capabilities, Chipotlane drive-thru stores, and second-make lines dedicated to digital orders -- also help to drive restaurant sales while keeping a lid on expenses.  

I think it's completely in the realm of possibility that as Chipotle gains greater scale with double-digit top-line growth, its net income will continue to soar. Helping in this department is the fact that the company has proven its ability to consistently raise prices. Even so, consumers believe the Tex-Mex chain still offers tremendous value. 

What about the stock price? 

Usually, a rapidly expanding store footprint, rising revenue, and increasing profitability should result in a much higher stock price in five years' time. The curveball that muddies the picture in this situation is Chipotle's current valuation. As of this writing, shares trade at a hefty price-to-earnings (P/E) ratio of 57. This isn't surprising give the stock's outsize past performance. It's also worth noting that in the last five years, shares have rarely sold at a trailing P/E multiple below 50. 

For what it's worth, Chipotle's stock has seemingly always looked expensive, yet it has substantially outperformed the broader market. Plus, the business has a solid track record of beating Wall Street earnings estimates, which has helped propel the stock higher. 

In five years, if shareholders start to lose their excitement about a more mature Chipotle, then maybe the valuation multiple compresses. And in this scenario, the stock's return could be disappointing despite the strong fundamentals that I discussed above. 

What valuation Chipotle's shares trade at in the future is really anyone's guess. The company continues having strong momentum, and this could be the case in five years. So, I wouldn't be shocked if the stock beats the S&P 500 again between now and July 2028.