Not lovin’ it: McDonald’s pulls out of Iceland
The global burger colossus is closing its Reykjavik outlets in the wake of the financial crisis
It's not all bad news for Icelanders, their country buffeted by the storms of the economic crisis. The multinational fast food giant McDonald's announced yesterday that they would no longer be represented in the country effective from next week.
There are currently three McDonald's restaurants on the island, all in the capital Reykjavik, which are operated by the national franchise holder Lyst Hr. The company's managing director Magnus Ogmundsson explained to the Associated Press how "the economic situation has just made it too expensive for us".
Lyst Hr has to import all its ingredients from Germany, and with the collapse of the krona currency after the banking crisis of last October, coupled with the imposition of ruinously high tariffs on imported goods, it is now no longer viable for McDonald's to remain in the country.
The Big Mac, the company's flagship burger, currently costs 650kr (£3.22), but for the business to make a worthwhile profit they would have had to raise the price by a fifth to 780kr (£3.86), which would have made it the most expensive version of the sandwich in the world. In London, a Big Mac is currently £1.99.
"I've sold more hamburgers in the last few months than ever before, but the cost is prohibitive. It just makes no sense," Ogmundsson told Reuters. "For a kilo of onion, imported from Germany, I'm paying the equivalent of a bottle of good whiskey."
The first McDonald's arrived in Iceland in 1993; the then Prime Minister David Oddsson was the first person to eat a Big Mac on the island. Ironically enough, Oddsson became governor of the Icelandic central bank Sedlabanki after his time in office, and was forced out of his position there earlier this year for his role in the economic crisis.
Those Icelanders who see McDonald's as a force for evil will be overjoyed to learn that the company has no plans to return, ensuring that the country will join Bosnia-Herzegovina and Albania in being McD-free European states.
"The unique operational complexity of doing business in Iceland combined with the very challenging economic climate in the country makes it financially prohibitive to continue the business," a spokeswoman at McDonald's headquarters in Illinois said. "This complex set of challenges means we have no plans to seek a new partner in Iceland." ·
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