McDonald's McCafe menu gets a new plant-based option
Stock in Oatly, the oat milk producer, saw a significant surge on Monday after the company revealed a new collaboration with McDonald's. The stock rose 7% by noon, having previously hit a peak of 12% within the trading session. This move is tied to the partnership, which brings Oatly's Barista Edition to McDonald's McCafe outlets in Austria.
Oatly’s Barista Edition is a specially formulated oat milk that can foam when heated, mimicking the behavior of traditional dairy products. McDonald’s stated the decision to include it in Austria was influenced by growing consumer interest in plant-based beverages. The fast-food chain plans to make it available in all Austrian locations.
Supply chain improvements fuel CEO’s optimism
CEO Toni Petersson highlighted during a recent earnings call that Oatly’s supply chain is now fully capable of handling all incoming orders. He noted that this advancement has helped build stronger customer connections. This progress aligns with the company’s recent move to expand its partnership with McDonald’s. The prior relationship between the two companies suggests the Austrian rollout is part of Petersson's vision for 2023 growth.
Petersson emphasized that increased order fulfillment and improved customer relationships are crucial for driving sales in the year ahead. The news about the partnership reflects these priorities and has excited investors.
Profitability remains the key hurdle for Oatly
Despite the encouraging developments, Oatly still faces a major financial challenge: it recorded an operating loss of almost $400 million in 2022. The company’s leadership has stated that it has enough capital to continue operations, but it hasn’t yet achieved positive cash flow. Gross margins, which reached 15.9% in the last quarter of 2022, are expected to rise significantly to the high-20% range by the end of 2023.
This improvement in gross margins is seen as a vital step toward achieving positive EBITDA in 2024, which could mark a turning point for the company. Investors are closely following these quarterly figures to assess whether Oatly is on track to meet its financial goals. Expanding partnerships, like the one with McDonald’s, may help the company boost its sales and margins further.
With a focus on improving its financial performance, Oatly aims to leverage its growing network of partners and increased production capabilities to reach long-term profitability.
Meanwhile, the Motley Fool Stock Advisor has highlighted 10 stocks it believes investors should consider over Oatly at the moment. As for this update, it was prepared based on Nasdaq’s reporting. Jon Quast holds no position in any of the stocks referenced, and The Motley Fool also reports no ownership in these stocks. The views shared here are solely the author’s and do not represent Nasdaq, Inc.'s stance.