Everything was going well for Chipotle Mexican Grill (CMG 0.90%). The company grew at a decent pace, profits were strong, and its stock price had more than tripled in the last five years.

Just when investors were expecting the restaurant to keep up with its strong trajectory, CEO Brian Niccol announced his departure to join Starbucks. Niccol has been instrumental to Chipotle’s outperformance since he joined in 2018, so investors were concerned about the company’s future without its star CEO.

While no one likes uncertainty, there are still good reasons to like the company, so much so that I have added it to my watch list.

Image source: Getty Images.

Chipotle has a solid track record of execution

Chipotle has quietly delivered solid numbers over the last five years, growing revenue and profits by 103% and 596%, respectively. These numbers are impressive, considering that the company is a restaurant operator rather than a high-tech company.

It’s even more remarkable if we consider that the company faced a massive food scandal less than a decade ago that led to huge financial losses, a tarnished reputation, and the departure of many senior executives (and the stepping down of the founder and then-CEO Steve Ells to executive chairman). To put it into perspective, revenue and net profit were $4.5 billion and $476 million in 2015 but fell to $3.9 billion and $23 million in 2016 due to the food scandal.

But under Niccol and the team he built after taking over the helm, Chipotle has become stronger. In a few short years, Chipotle launched its digital order and pick-up service, opened new stores, grew its same-store sales, and improved the operational efficiency of the business. Operationally, Chipotle had 3,371 restaurants in the United States and another 66 overseas in 2023, up from 2,452 and 37 stores, respectively, in 2018 . Moreover, average restaurant sales rose from $2 million in 2018 to $3 million in 2023.

Most will credit Niccol for his leadership, but it is important to remember that the restaurant business is difficult and requires plenty of execution on all levels, especially at the ground level. Without the support of his management team and the dedication of the people at the restaurants, no CEO can turn around the business on their own, let alone deliver industry-leading performance.

In other words, while there are good reasons to be concerned about Niccol’s departure to join Starbucks, I’m cautiously optimistic that he has likely left a solid team and legacy in place that could continue after his departure. For instance, interim CEO Scott Boatwright has been the chief operating officer since 2017, and long-term company veteran Jack Hartung has decided to postpone his retirement “indefinitely” to ensure a smooth transition.

Chipotle can continue to grow in the coming years

Chipotle’s solid growth over the last few years might have made it a huge company, but it still has many levers to pull to keep its growth machine spinning.

The most obvious way is to keep opening restaurants in the U.S., growing its store counts from 3,371 to its target of 7,000 in the coming decade . For perspective, there are around 45,000 McDonald’s restaurants globally (around 15,000 in the US alone), suggesting that Chipotle is far from saturating its core market.

Besides, even if it has fully exploited the opportunity in the U.S., Chipotle still has ample room to grow globally, given its low store count of fewer than 100. Beyond that, Chipotle can also grow its same-store sales by encouraging customers to visit the store more often and increasing customer spending per visit. To this end, it should continue to delight its customers by adding new items to its menu, experimenting with new digital initiatives, and offering better rewards via its loyalty system.

In short, there is still plenty of work that the company can do to grow in the coming years (if not decades).

What it means for investors

Chipotle has performed well in the last few years, delivering remarkable revenue and profitability growth.

While it’s no longer small, it still has the ingredients to grow in the coming years as it continues to open new stores, enter new markets, and increase the revenue of existing stores.

Still, the sudden departure of its previous CEO left investors with a big question mark of whether the restaurant operator can continue to deliver in the future. Thus, investors should closely monitor Chipotle’s performance in the coming quarters to get a sense of how this may affect the company’s bottom line.