McDonald's abandons Iceland
Posted
Oct 27 2009, 12:08 PM
by
Kim Peterson
Rating:
Would you spend $6 on a Big Mac? I wouldn't, and neither will people in Iceland.
That's why McDonald's (MCD) is closing its three restaurants in Iceland and has no plans to return, according to the Financial Times.
The move says more about Iceland than it does McDonald's. Until recently, Iceland was one of the wealthiest countries in the world. But its financial system imploded in the global credit crisis, and its three biggest banks were ruined by high debt. Its currency went into a tailspin and its capital markets shut down.
The departure of McDonald's is perhaps a tacit acknowledgement that the country isn't coming back. McDonald's cited the "very challenging economic climate" on the island nation, according to the FT.
Icelandic McDonald's restaurants imported supplies from Germany, and their costs have doubled as the krona collapsed, the FT reported. The restaurants would have had to raise prices by 20% in response. That means the Icelandic Big Mac would have cost far more than the $6 Big Mac in Switzerland.
Now, Iceland will join Albania, Armenia and Bosnia and Herzegovina on the list of McDonald's-free countries in Europe.
