Chipotle Mexican Grill, the renowned burrito-centric restaurant chain, is set to make a significant change to its stock structure by carrying out a 50-for-1 stock split in June. This move is unprecedented for the company, which went public in 2006. However, the proposal still requires shareholder approval, though its acceptance seems likely.

It is crucial for investors to understand that stock splits do not generate any shareholder value. Presently, Chipotle stock is trading near $3,000 per share. After the split, which grants investors 49 additional shares for each share they own, the price will decrease to approximately $60 per share without any value being created or lost in the process.

Chipotle's impressive growth in recent years has primarily been driven by an increase in the number of locations and higher sales per location. From approximately 500 locations at the time of its initial public offering, the company has expanded to over 3,400 today. Average unit volumes also more than doubled from $1.4 million in 2005 to over $3 million by the end of 2023, contributing to the exponential growth of Chipotle's bottom line.

CEO Brian Niccol remains optimistic about the company's future growth potential. Niccol projects an ambitious goal of surpassing 7,000 locations in North America in the long term, which is more than double its current footprint. Moreover, he believes average unit volumes can eventually exceed $4 million.

While the stock split may not directly impact Chipotle's ability to achieve these business goals, there are several benefits associated with the 50-for-1 split. The reduced post-split price of $60 per share makes Chipotle stock more accessible to everyday investors who may have been deterred by its previous price of $2,900 per share. Additionally, the lower price also opens up opportunities for investors to engage in Chipotle stock options, which previously required a considerably higher investment.

Existing shareholders may consider various strategies involving options contracts. For example, selling a call option can lower the overall cost of buying Chipotle stock. However, this approach does come with potential downsides, such as the obligation to sell shares if the stock climbs above the option price within a specified time frame.

Overall, while the stock split itself may not substantially impact the company's operations, it holds positive implications for investors. The new structure allows for increased accessibility and potential investment strategies, providing more opportunities for individuals to participate in Chipotle's success.

Investors should carefully consider all aspects and conduct thorough research before making any investment decisions regarding Chipotle Mexican Grill.

Disclaimer: Jon Quast has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Chipotle Mexican Grill. The Motley Fool has a disclosure policy.