“So long, farewell, auf Wiedersehen, good night I hate to go and leave this pretty sight…” (The Sound of Music)
Iceland says goodbye to the Big Mac
by Gudjon Helgason and Jane Wardell, Associated Press Writers
(On 3:41 pm EDT, Monday October 26, 2009)
The Big Mac, long a symbol of globalization, has become the latest victim of this tiny island nation’s overexposure to the world financial crisis. 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. 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. 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.
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.
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.