U.S. Markets close in 9 mins

The outlook for Chipotle amid covid-19

Vlad Rikhter, Zenput CEO & Co-Founder, joined Yahoo Finance to disucss outlook for Chipotle and the restaurant industry amid covid-19.

Video Transcript

SEANA SMITH: Chipotle was out with earnings earlier this week, giving us the latest look as to how some of these biggest chains out there in the US are holding up amid the pandemic. For more on this, we want to bring in Vlad Rikhter. He's the CEO and co-founder of Zenput.

And Vlad, you're a tech platform that you're used in more than 50,000 restaurants, so you know this landscape better than most people do at this point. What are you seeing? What are you hearing from your clients, and how is the restaurant industry faring at this point?

VLAD RIKHTER: You know, I think we've seen a lot of bounce back from where we were, at least at the beginning of COVID last year. There are probably a couple of fronts that we're seeing success online. And Chipotle touched on it yesterday. As a whole, their digital sales at this point are nearly 50% of their overall sales, which is pushing the likes of Domino's, who's at nearly 70%. These are phenomenal ways to make sure you're getting a slightly higher check, the amount spent from each customer that's coming into your facility.

You're better able to invest in operations around it. You're getting a lot more profitability on that front. And we've had to do that over the course of last year. We've had to turn around and all of a sudden make sure that we're doing more cleanliness checks on the environment. We've had to make sure that we're checking our temperatures every time we're walking in there, and that we, as consumers, feel safe whenever the food that we're getting.

I'm sure some of you guys have ordered from Chipotle recently, or amongst other brands, and you'll see that when they give you a bag, they close it up at the top, make sure that there's a big sticker on it that you know that when you're getting it at home, that no one's tampered with it, that you're free to eat that food, and that it's hopefully as tasty as always.

ADAM SHAPIRO: So Vlad, I'm curious, because the kind of data you have, you're confirming sanitization and cleanliness at a restaurant. I would imagine that data has value outside of just the immediate restaurant world, but to investors, because it gives you kind of a forward looking what's happening next with different chains and with growth. Have you ever been approached to sell that data? Do you offer that data to investors? Would you?

VLAD RIKHTER: You know, I think over the years, people have asked all sorts of questions. But we make it point number one in the way that we work with our customer that this is their data, not ours. We would never sell data on behalf of them.

I will tell you that, you're absolutely right. We've seen tremendous engagement over the course of last year, nearly tripling the amount of checks that a lot of these restaurants and food service environments are doing. These are convenience stores. These are grocery locations. They're using the same playbook across the board. They've got to make sure that these places are kept clean. They're making sure that they're spotless for not just the food environment, but for you and I to walk into it. And the amount of need to move quickly, to be really agile, to make sure that you can deliver that experience has been top notch.

And I've got to commend the frontline workers in these places, because this hasn't been an easy endeavor. But they've got to do significantly more work and still deliver on the promise of, you know, great food that you and I want to eat on a regular basis.

SEANA SMITH: So Vlad, we're worried about cleanliness right now. But what's the new normal post pandemic? I guess, how many of these safety measures do you think are here to stay?

VLAD RIKHTER: You know, I've got to tell you, in the conversations I'm having, pretty much most of them. I think the reality for us is that there are going to be a lot of people in this country that when we come out of COVID on the other side, we've seen this, I think, in Asia for the better part of the last decade or two that are still going to continue to wear masks when they're out in the environment. And they're going to want to be very careful whenever they walk into a restaurant facility who else is around them. They're going to look for a lot of these little touch points of making sure that bag has been tamper proofed, the place looks extra spotless.

You know, maybe we see a bit of a slowdown and it's not as much activity on a regular basis, in terms of even the way our product engages with our customers. Instead of checking something every two hours, maybe that will go to every three hours. But as a whole, I don't see it going away. I mean, we have this conversation on an ongoing basis with our operators. And the thing that we hear from them is that, look, we've developed over the course of last year a new way to deliver safety standards to the customer. Why would we walk that back? We want to tell them that we're still being as safe as we were during COVID after the fact.

So I think you're going to see not only changes on that piece of it, but you're going to see changes, a continued sort of success on the digital side as well. Like the fact that Chipotle's had nearly 50% of their sales coming through the digital footprint, from the digital application that they have today, that's only going to increase, right? COVID was a big expeditor for this industry. And for anyone in the food service world, be they in convenience and grocery, this got them to a stage that they should have been in probably three or four years from now. We just got here a lot earlier with it. And I think it serves us better as consumers and it serves the industry much better as well.

SEANA SMITH: All right. Vlad Rikhter, CEO and co-founder of Zenput. Thanks for taking the time to join us.