There is still a lot to improve if Arsenal is to win the Champions League. I have to admit, in the last few seasons Arsenal have experienced an improvement in performance, but they also still have weaknesses in terms of their inability to maintain consistent performance. Arsenal often slip up in games they should be able to win, these mistakes make them always unable to compete with Manchester City in the race for the EPL title.
To win the UCL you need a squad that is able to maintain its performance in every match. Arsenal must learn more from the success achieved by Real Madrid and Manchester City if they want to win this most prestigious championship. Arsenal still needs time to compete with Real Madrid or other big clubs, maybe it's true as you said, Arsenal should focus on the EPL first, when they are able to win the title, they can increase their target to the UCL.
Arsenal is a very good team in the premier league but before they can think of winning the Champions League they first of all have to win the premiership as that will give them a boost to be able to be a strong contender in the champions league and for now, despite that Arsenal have one of the best squads in England, they still have a lot of works to do in building a strong and energetic team that can stand other stronger clubs like Real Madrid, Barcelona, Manchester City and others which will take a lot of commitment from the players and Mikel Arteta and they also need to make good signings especially in their midfield and the defense area, those are the most areas that Arsenal is lacking behind so if they can make a solid and strong defense i believe the attackers can do their job perfectly by scoring goals. Arsenal needs to be in a consistent form and win so many great clubs before they can reach the standards of winning the Champions League so it's definitely going to take a lot of time.