Iceland’s McDonald’s restaurants will be closed at the end of the month after the collapse of the krona eroded profits of the fast-food chain.
The McDonald's problems are rooted not only in the collapse of the krona, but also because the country's restaurants have to import most of the ingredients used for their food.
“We would have to raise our prices by 20 percent to get the margin needed on our products,” Magnus Ogmundsson, Lyst chief executive officer,
told Bloomberg.com. “That would have sent a Big Mac to 780 kronur” ($6.36), compared with the 650 kronur it costs today, he said.
The country’s currency collapsed last year, while the rest of the world's economies suffered as well. The failure of Iceland’s biggest banks has caused the krona to slump as much as 80 percent against the euro.
“Our competitors all use domestic meat and lettuce and so on, while we are flying in these materials, which is extremely expensive,” Ogmundsson said.
McDonald's opened its first Icelandic restaurant in 1993, but the closure will not be the widescale closure other countries would see. The island has just three McDonald's chain stores, and all will be shut down.
Reactions to the news have been mixed, from elated, to depressed.
Blogger Pall Vilhjalmsson said he was glad the stores were closing, calling the chain a “symbol of American colonialism” and that it has “terrorized food culture all over the world.”
Another blogger,
Hreinn Omar Smarason, said he will “miss Ronald McDonald.”
