Fast-casual restaurant chain Chipotle Mexican Grill (CMG 2.41%) just reported financial results for 2023, showing that it now has 3,437 locations, 271 of which opened in the last year. The chain is big enough to qualify as one of the top 20 largest chains in the U.S. by locations. But it wants to rise further up the restaurant ranks.
In an interview with CNBC's Jim Cramer on Tuesday, Chipotle CEO Brian Niccol said the company plans to more than double its store count, reaching 7,000 locations at some point. Niccol added, "We view it as a conservative number, and we view it as something that's very feasible in the long term."
Chipotle's goal for 7,000 locations was not part of the discussion a little more than a decade ago. Back in the 2000s, management was focused more on a long-term goal of around 3,000 locations. Considering it had only about 500 restaurants when it went public in 2006, that goal seemed pie in the sky at the time.
Since then, the company has opened new Chipotle locations at a breakneck pace for years because the unit economics support the decision. Consider this table with some key performance metrics.
| Key Metric | 2018 | 2023 |
|---|---|---|
| Restaurant locations | 2,491 | 3,437 |
| Average annual volume per unit | $2 million | $3 million |
| Restaurant-level operating margin | 18.7% | 26.2% |
Data source: Chipotle's financial filings. Table by author.
In other words, Chipotle opened roughly 1,000 new locations in just five years without sacrificing sales volume or profitability -- in fact, those two metrics improved substantially during this time. This is a clear indication of consumer demand and efficient operations.
Looking ahead, Chipotle's management doesn't believe it's reached a ceiling. With its new goal of 7,000 locations, the company has a goal to reach average unit volumes (annual sales per location) of $4 million. That's a meaningful improvement from today and could potentially support higher profit margins if achieved.
Chipotle's stock price is up about 400% in the last 10 years, more than doubling the return for the S&P 500. However, there could indeed be more upside ahead for shareholders if the company continues to achieve its long-term goals.
