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How companies like Chipotle successfully adapted during the pandemic

In this article:
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TKer.co Editor Sam Ro joins Yahoo Finance Live to discuss the changes companies and markets have adopted since the start of the pandemic.

Video Transcript

BRIAN SOZZI: Today marks the second anniversary of the World Health Organization declaring COVID-19 a pandemic. And no doubt about it, a lot has changed since for-- since then, for investors and corporate America. Let's dive into the changes within companies. TKer editor and friend of the show Sam Ro joins us now. Sam, always good to see you here. What has been perhaps the biggest change inside of companies over the past two years?

SAM RO: Sure. Well, you know it's not just the two year anniversary of the WHO declaring the health emergencies, the two-year anniversary of companies deciding that it's not business as usual. So right away, everyone's making changes. And, you know, I was going to talk about restaurants for a second, but, you know, even when we're thinking about media, for instance, overnight, so many news stations and publications and stuff, and even companies like Yahoo Finance, had to make changes in order to continue serving their customer and to continue keeping the lights on for their business and their employees and all of this stuff.

But, you know, I think one thing that a lot of people have noticed, of course, is, you know, what's been going on with the restaurant industry. Overnight, because for health reasons and social distancing reasons, a lot of dining rooms had to close. So, you know, what do you do? If you're a restaurant owner, you can't just say, you know, forget it. It's not just business as usual. You have to make changes. So a lot of restaurants go ahead and get online, start doing online delivery, make tweaks to their food offerings so that they have something that can actually be delivered to the home, as opposed to is only good for a couple of minutes.

And, you know, I think one of the great sort of examples of a company that was really in front of this and really adapted to this really quickly was Chipotle. Chipotle, again, everyone goes to Chipotle. You go in, you stand in line, you order food, you ask for each of these individual ingredients. And, you know, that's part of the Chipotle experience. They had a small digital business going into the pandemic, but three or four months into the pandemic, suddenly, online digital sales become 60% of their business.

So their whole business model has basically completely changed. But, you know, that's how they were able to adapt, and that's how they were able to continue to generate sales and earnings. And, you know, it sort of is a really great example of a company that made changes to continue to be operational during these incredibly challenging times.

JULIE HYMAN: What's really interesting to me, too, about Chipotle, Sam, is that those changes are sticky changes. In other words, even as we come out of the pandemic, a lot of the company's business remains digital. It has been a source of strength for them. And there's lots of examples of those kinds of changes. But there's also lots of examples of the counter, right, which is that a lot of changes that people made and companies made during the pandemic that now they need to sort of pivot again out of, and it seems like for some-- I mean, DocuSign is one example today. We're going to talk to the CEO Dan Springer a little bit. That's another example where that's a messy process.

SAM RO: Right. Yeah, I mean, it's a great example of the pendulum swinging extremely in one direction the other way. And right now, we may be going in the opposite direction. But I think, you know, we do sort of end up somewhere in the middle, where we'll more sort of get away from-- we'll never fully get away from a lot of the changes that were made because of the pandemic. And I think one of the ways that a lot of companies have sort of described these sort of permanent changes, it's not so much that we're not going to go back to some old normal, but rather, a lot of inevitable changes have been accelerated by five, 10 years because of the pandemic.

A lot of these sort of ideas about creating these sort of hybrid work models, half work from home and half coming into the office, were already things that some companies were sort of thinking about, but, you know, the pandemic kind of forced them to implement that right away. And now they're getting all that information. They're learning about it. They're learning about what works and what works for recruiting an effective business.

So, you know, I think for companies like DocuSign and Zoom and all this stuff that were incredibly red hot companies and stocks during the pandemic, I think their revenue levels are going to continue to be much higher than what we saw before the pandemic because these are a lot of permanent changes happening.

JULIE HYMAN: Right, it's just the growth level that's going to be a different one. And then finally, I want to ask you something about the markets, right? Because we were just looking at the chart this morning. We are still up about 50% or more from the pandemic. But you tweeted a chart this morning that I thought was really interesting that looked at the volatility that we've seen more recently. That it is, what, the 39th straight day that we've seen an intraday swing of at least 1%. So that implies that market participants, with this latest crisis, are still trying to get their hands around it.

SAM RO: For sure. I mean, you know, it's just uncertainty that's incredibly high, right? And that's what's going to drive volatility and markets in the near term, is uncertainty. And, you know, unfortunately, what seems to be driving markets right now is the crisis right now in Ukraine, where it's still a developing problem. It's a developing problem for investors. It's a developing matter for economists and analysts to sort of model in because it hasn't ended yet. You know, we still don't know how much further it's going to escalate. We don't know how many months or years-- God forbid years-- but we don't know how long this is going to last.

So with each sort of headline in terms of, is there a positive development or a negative development, markets, I think, are going to continue to be extremely sensitive to what those headlines look like because that's going to impact, you know, the trajectory of how people think about planning, you know, their businesses.

BRIAN SOZZI: So very true. Always great to get some time with you, TKer editor and friend of the show, Sam Ro, have a wonderful weekend.