REYKJAVIK, Iceland, Oct. 26, 2009
Iceland Says Bye to the Big Mac
Falling Profits Force Closure of Tiny Island Nation's Three McDonald's Restaurants
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(AP)
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Iceland's three McDonald's restaurants - all in the capital Reykjavik - will close next weekend, as the franchise owner gives in to falling profits caused by the collapse in the Icelandic krona.
"The economic situation has just made it too expensive for us," Magnus Ogmundsson, the managing director of Lyst Hr., McDonald's franchise holder in Iceland, told The Associated Press by telephone on Monday.
Lyst was bound by McDonald's requirement that it import all the goods required for its restaurants - from packaging to meat and cheeses - from Germany.
Costs had doubled over the past year because of the fall in the krona currency and high import tariffs on imported goods, Ogmundsson said, making it impossible for the company to raise prices further and remain competitive with competitors that use locally sourced produce.
A Big Mac in Reykjavik already retails for 650 krona ($5.29). But the 20 percent increase needed to make a decent profit would have pushed that to 780 krona ($6.36), he said.
That would have made the Icelandic version of the burger the most expensive in the world, a title currently held jointly by Switzerland and Norway where it costs $5.75, according to The Economist magazine's 2009 Big Mac index.
The decision to shutter the Icelandic franchise was taken in agreement with McDonald's Inc., Ogmundsson said, after a review of several months.
"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," Theresa Riley, a spokeswoman at McDonald's headquarters in Oak Brook, Illinois, said in a statement. "This complex set of challenges means we have no plans to seek a new partner in Iceland."
McDonald's, the world's largest chain of hamburger fast food restaurants, arrived in Reykjavik in 1993 when the country was on an upward trajectory of wealth and expansion.
The first person to take a bite out of a Big Mac on the island was then-Prime Minister David Oddsson. Oddsson went on to become governor of the country's central bank, Sedlabanki, a position that he was forced out of by lawmakers earlier this year after a public outcry about his inability to prevent Iceland's financial crisis.
Lyst plans to reopen the stores under a new brand name, Metro, using locally sourced materials and produce and retaining the franchise's current 90-strong staff.
Ogmundsson said it was unlikely that Lyst would ever seek to regain the McDonald's franchise with Iceland still struggling to get back on its feet after the credit crisis crippled its overweight banking system, damaging the rest of its economy, last October.
"I don't think anything will happen that will change the situation in any significant way in the next few years," Ogmundsson said.
It is not the first time that McDonald's, which currently operates in more than 119 countries on six continents, has exited a country. Its one and only restaurant in Barbados closed after just six months in 1996 because of slow sales. In 2002, the company pulled out of seven countries, including Bolivia, that had poor profit margins as part of an international cost-cutting exercise.
© MMIX The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.
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- They've just opened number 1035 in France.
Serve's the French right for calling Americans a bunch of
Fat George-Bush-Warmongers. We're not that Fat at all. - Reply to this comment
- If I didnt have kids I would never eat there. And even then I only go there on special occasions for them like if they want to go on their birthday.
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- It begs the question why McDonalds would not let them source locally and stay competitive.
Curious...... - Reply to this comment
- Now they need to do the same with Taco *H*e*l*l*
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- It will be better for them.
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- I make my own fries at home. Baked, with various seasonings sprinkled on. Much healthier!
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- I live in West Virginia. One of the prime causes of obesity in this country, especially down south is the love affair with McDonald's, Burger King & KFC. Folks down here live on this Crap! Icelanders should consider themselves lucky to be getting away from this stuff!
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- Instantly, the health outlook of Iceland has markedly improved.
Well done!! - Reply to this comment
- Instantly, the health outlook of Iceland has markedly improved.
Well done!! - Reply to this comment
- They have even taken all the condiments out of the dining room here, except ketchup. You have to get back in line for salt for heaven sakes! On a big breakfast meal you get one pat of butter for three pancakes and a biscuit! One package of jelly, instead of two as it used to be. Going though drive through you have to check your order before driving off as they always screw it up! I won't go to Mc's anymore, everyone should boycott them!
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- missme4 - If this is your idea of a joke, you may need help. Starting rumors can have a devastating impact on a company and its employees. You made an accusation. Can you back it up with proof? If not, it is time for you to show more common sense. Would you also set off a fire alarm as a prank?
- askagain, I used to work for McD's back in the 80's and what he said is true, they HAVE taken the condiments out of the dining room. However, what he failed to mention is that they didn't used to have condiments in the dining room in the first place. Originally they were always behind the counter, then they tried putting them out in the dining room - it works for some stores, but not all.
You can complain about McD's all you want but they no longer fry in beef tallow, and you can order burgers pain, with just meat and a bun, and you can get salads there.
And as far as checking the order in the drive thru, that's true of every drive-in restaurant there is. I've eaten in all of them and they all screw the orders up.
- "They have even taken all the condiments out of the dining room here, except ketchup. You have to get back in line for salt for heaven sakes! On a big breakfast meal you get one pat of butter for three pancakes and a biscuit! One package of jelly, instead of two as it used to be."
They do these things so they can claim their meals are healthier.
- McDonald's is the #1 purchaser of cow eyeballs in the world. They mix the eye balls in the beef to help keep them from burning when they fry those nasty burgers. Sorry, I just can't bring myself to eat those slimy burgers.
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- Hey, next time try NOT believing every little thing you hear or read about online. I cannot stand McDonald's, but the cow eyeball thing is idiotic, and just plain not true.
http://www.snopes.com/horrors/food/coweyes.asp
- Hey, next time try NOT believing every little thing you hear or read about online. I cannot stand McDonald's, but the cow eyeball thing is idiotic, and just plain not true.
http://www.snopes.com/horrors/food/coweyes.asp
- Now stop for a moment and think of the economic stupidity of that statement. Eyeballs?? Are you that stupid??? Wouldn't breadcrumbs be much, much cheaper and easier to work with?? Next you'll be saying they add the left ventricle. Where oh where do people come up with this. Come on folks!!! We got to support more school levies!!!
- Hey, next time try NOT believing every little thing you hear or read about online. I cannot stand McDonald's, but the cow eyeball thing is idiotic, and just plain not true.
- Not to besmirch our friends why would you want to close all three(3) franchises especially since they are located in the same city? I could see if none had clients that might be advisable, but why not start with closing one, than another and than the last one after you have enough data to back your decision?
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- Your arteries will thank you.
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- I feel sorry for them. Say what you want, but a Big Mac is one of the true hangover cures known to man.
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- This is no surprise. When costs exceeds profits, then it's time to go! I hope the new franchise takes a healthy approach with fresh, local foods that are produced locally. Everyone will benefit with boosting the economy, retaining employees and offering food that isn't disgusting like McDonald's. I do not see what people think is so yummy about their food. I'd rather have a fresh salad any day.
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- You want a Big Mac? That'll be 1,000,000 krona.
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- Good for them. We should do that McHere. Or we should bill them for the real costs of their "food" by products. They should pay for obesity and health education in schools. Even if they have no money left after that. They can choose to leave and open some stores in Antarctica.
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- I agree,in fact if I had things my way,all fast food business and all junk food would be banned from the face of the earth and the only food that could be eatan is good wholesome healthy foods that our ancestors of 100 and 200 years ago ate.Just think how healthy our society would be today if fast food,tobacco and alcohol had never been created.
- banned? people should have a CHOICE, but yes purveyors of evil food should have to pay. BANNING things is never the answer, Kim Jong.
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