It’s been a tough year for Iceland. Thanks to foreign money, crazy lending and borrowing practices and a real estate bubble that amazed the world as it grew and when it popped, the small northern country has suffered severely through the global financial crisis … which was predicted by a walking tour guide prophetic viking. Now, a year after Iceland went bankrupt, it’s losing something else – fast food. McDonald’s is leaving the island nation.
Reykjavik, the capital, is home to all three of the country’s McDonald’s restaurants … but not for long. The decimation of the Icelandic krona and declining profits are forcing the franchise owner to call it quits. Magnus Ogmundsson, managing director of Lyst Hr., which holds the franchise in Iceland, told The Associated Press, “The economic situation has just made it too expensive for us.” His situation was made difficult by the McDonald’s requirement that the store’s goods be imported from Germany. So, he had to spend in euros, which became incredibly expensive because of the krona’s plunge.
To get a sense of how bad the situation became, check out the price of a Big Mac. It already costs $5.29 in Reykjavik, and to turn a profit, it would have to go for $6.36 – making it the most expensive in the world. Currently, the title goes to Switzerland and Norway, where a Big Mac costs $5.75.
Ironically, the first person to taste a Big Mac in Iceland was David Oddson. At the time, he was the prime minister but later moved into the position of governor of the country’s central bank, where oversaw the rise of the bubble. He was forced out of office by lawmakers earlier this year.
McDonald’s has had a presence in Reykjavik since 1993 but has no plans to return in the near future. Theresa Riley, a company spokesperson, released a statement saying, “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.” She added, “This complex set of challenges means we have no plans to seek a new partner in Iceland.”
Lyst, however, isn’t finished. Ogmundsson plans to reopen the stores under the name Metro and use locally sourced materials and produce, keeping the company’s 90 employees in jobs.
In the meantime, you can still get a solid hotdog in Reykjavik with fantastic mustard.