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Iceland to be McDonald's-free

 
 
Reply Mon 26 Oct, 2009 11:06 am
Quote:
McDonald’s Closes in Iceland After Krona Collapse

By Omar R. Valdimarsson

Oct. 26 (Blomberg) -- Iceland’s McDonald’s Corp. restaurants will be closed at the end of the month after the collapse of the krona eroded profits at the fast-food chain, McDonald’s franchise holder Lyst ehf said.

McDonald’s in Iceland, which imports most of the ingredients it uses in its meals, will shut after costs doubled over the past year, Lyst said in an e-mailed statement today. The franchise holder said it doesn’t expect the situation to change in the short term.

“We would have to raise our prices by 20 percent to get the margin needed on our products,” Magnus Ogmundsson, Lyst chief executive officer, said in a phone interview. “That would have sent a Big Mac to 780 kronur” ($6.36), compared with the 650 kronur it costs today, he said.

The island’s currency collapsed last year following the failure of Iceland’s biggest banks. Offshore, the krona slumped as much as 80 percent against the euro, while capital restrictions this year have failed to prevent an 8.1 percent decline, making the krona the second-worst performer of the 26 emerging-market currencies tracked by Bloomberg.

“Our competitors all use domestic meat and lettuce and so on, while we are flying in these materials, which is extremely expensive,” Ogmundsson said.

BigMac Index

The most expensive Big Macs are sold in Switzerland and Norway, where the burger costs about $5.75, according to the Economist 2009 BigMac index. The cheapest are sold in South Africa, $1.68, and China, $1.83, the index shows.

McDonald’s, the world’s largest restaurant chain, opened its first store in Iceland in 1993. The first person on the island to consume a Big Mac was then Prime Minister David Oddsson, who later became governor of the central bank before his dismissal by the current ruling coalition earlier this year. The island has three McDonald’s restaurants, all of which will be closed.Oct. 26 (Bloomberg) -- Iceland’s McDonald’s Corp. restaurants will be closed at the end of the month after the collapse of the krona eroded profits at the fast-food chain, McDonald’s franchise holder Lyst ehf said.

McDonald’s in Iceland, which imports most of the ingredients it uses in its meals, will shut after costs doubled over the past year, Lyst said in an e-mailed statement today. The franchise holder said it doesn’t expect the situation to change in the short term.

“We would have to raise our prices by 20 percent to get the margin needed on our products,” Magnus Ogmundsson, Lyst chief executive officer, said in a phone interview. “That would have sent a Big Mac to 780 kronur” ($6.36), compared with the 650 kronur it costs today, he said.

The island’s currency collapsed last year following the failure of Iceland’s biggest banks. Offshore, the krona slumped as much as 80 percent against the euro, while capital restrictions this year have failed to prevent an 8.1 percent decline, making the krona the second-worst performer of the 26 emerging-market currencies tracked by Bloomberg.

“Our competitors all use domestic meat and lettuce and so on, while we are flying in these materials, which is extremely expensive,” Ogmundsson said.

BigMac Index

The most expensive Big Macs are sold in Switzerland and Norway, where the burger costs about $5.75, according to the Economist 2009 BigMac index. The cheapest are sold in South Africa, $1.68, and China, $1.83, the index shows.

McDonald’s, the world’s largest restaurant chain, opened its first store in Iceland in 1993. The first person on the island to consume a Big Mac was then Prime Minister David Oddsson, who later became governor of the central bank before his dismissal by the current ruling coalition earlier this year. The island has three McDonald’s restaurants, all of which will be closed.

The closure sparked a wide range of responses from bloggers on the island. 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.” Hreinn Omar Smarason, said he will “miss Ronald McDonald,” adding he hopes the stores will return as soon as possible.

Iceland is relying on a $2.1 billion loan from the International Monetary Fund to stay afloat after its three biggest banks collapsed having racked up debt more than 10 times the size of the economy. The central bank imposed capital restrictions at the end of last year to prevent a sell-off of the currency.

The closure sparked a wide range of responses from bloggers on the island. 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.” Hreinn Omar Smarason, said he will “miss Ronald McDonald,” adding he hopes the stores will return as soon as possible.

Iceland is relying on a $2.1 billion loan from the International Monetary Fund to stay afloat after its three biggest banks collapsed having racked up debt more than 10 times the size of the economy. The central bank imposed capital restrictions at the end of last year to prevent a sell-off of the currency.
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Type: Discussion • Score: 8 • Views: 3,505 • Replies: 16
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dyslexia
 
  1  
Reply Mon 26 Oct, 2009 11:15 am
well I'm glad thats settled, I was planning a holiday in iceland but I'll probably go to nepal instead.
0 Replies
 
NickFun
 
  2  
Reply Mon 26 Oct, 2009 02:36 pm
I guess the people will have to eat healthy foods from now on.
0 Replies
 
tsarstepan
 
  1  
Reply Tue 27 Oct, 2009 11:40 pm
@Walter Hinteler,
I just stumbled onto the news of the demise of Iceland's McDonalds at one of the foodie blogs at the New York Magazine site.

Good for Iceland! And good riddance.
0 Replies
 
saab
 
  1  
Reply Fri 30 Oct, 2009 02:49 am
Yes Iceland to be McDonald´s free and that is a sad thing and has nothing to do with healthy food.
Iceland is now so poor that they cannot afford to keep McDonald´s.

Also closing down brings out pessimism instead of optimism.
We know from every little town that as soon as a big chain opens up there is a feeling of "big city", something new and new flair.
As soon as a chain closes and we have empty stores a certain feeling of pessimism is growing.

Iceland has big problems and you just start to make fun of it.
Walter Hinteler
 
  1  
Reply Fri 30 Oct, 2009 04:24 am
@saab,
Iceland had two (2) McDonald's. And they were - and are - indeed too "poor" for keeping them open: they had to import all and everything which is served there from foreign countries (the beef products from Germany, for instance).

I didn't made fun of it - it has been reported in all media.

And in Iceland (all copied from the Morgunbladid)

http://i38.tinypic.com/mwsfgh.jpg
27 November, page 12
Walter Hinteler
 
  1  
Reply Fri 30 Oct, 2009 04:24 am
@Walter Hinteler,

http://i33.tinypic.com/359jrpd.jpg
28 November, page 31

http://i34.tinypic.com/20ayq79.jpg
29 November, page 2


0 Replies
 
saab
 
  1  
Reply Fri 30 Oct, 2009 05:05 am
@Walter Hinteler,
Walter you did not make fun of it. You had a serious article.
It was not directed to you.
0 Replies
 
Green Witch
 
  1  
Reply Fri 30 Oct, 2009 05:35 am
Saab, empty stores are happening all over the world, not just in Iceland. In the US we have blocks of empty storefronts, even in the most wealthy neighborhoods. It's what happens when people spend more money than they really have. I think it's necessary to get back to a balanced economy based on what people can truly afford and not just borrow. I know many innocent people have been hurt, but sometimes things have to be torn down before they can be rebuilt for the better. In my town, we had a fast food restaurant go out of business two years ago and last week I drove by and noticed a sign up saying a BBQ restaurant was opening in the same spot. I was thrilled an individual was going to take up the challenge of starting a business and without the help of an overblown commercial franchise. Maybe one of your old McDonald's will become a fried cod stand owned by a local former real estate investor.
saab
 
  1  
Reply Fri 30 Oct, 2009 06:00 am
@Green Witch,
You are so right.
It is sad to see the empty stores especially in small inner cities.
As things are now I wonder if anyone can even lend money.

Iceland now wants to join EU - just hoping that is going to help their economy.
Someone else had another idea - not new the idea is over 100 years old.
That is a Swede


Many things come up for discussion at meetings of Nordic Prime Ministers. One thing on the PMs’ agenda today has particularly piqued public interest: Swedish historian Gunnar Wetterberg’s suggestion that the Nordic countries revive the Kalmar Union and become one single nation once more.

Margrethe II, Queen of Denmark would become queen of the whole new country, because Margrethe I was queen during the time of the Kalmar Union, RUV reports. All the Scandinavian nations were united as one between 1397 and 1523.

Wetterberg says that a single Nordic nation would have the world’s tenth biggest economy and could have significant influence on the world stage.

Walter Hinteler
 
  1  
Reply Fri 30 Oct, 2009 09:55 am
@saab,
saab wrote:

Many things come up for discussion at meetings of Nordic Prime Ministers. One thing on the PMs’ agenda today has particularly piqued public interest: Swedish historian Gunnar Wetterberg’s suggestion that the Nordic countries revive the Kalmar Union and become one single nation once more.

Margrethe II, Queen of Denmark would become queen of the whole new country, because Margrethe I was queen during the time of the Kalmar Union, RUV reports. All the Scandinavian nations were united as one between 1397 and 1523.


Well, I do wonder if Shetland, and Orkney Island would really such. Or Finland and Schleswig-Holstein Wink


(The Kalmar Union was, however, just a 'union': no country had given up it's sovereignty and all were still independent.)
saab
 
  1  
Reply Fri 30 Oct, 2009 10:49 am
@Walter Hinteler,
The Swedish paper "Dagens Nyheter" had the article and there were over 400 answers. I did not read all.
Some said yes we are so similar
Some said no we are so different
Some said yes let us get out of EU
Some said no we already have a expensive union - EU
One said Margrethe II can´t be queen of Sweden - she is a smoker.
0 Replies
 
photofan
 
  1  
Reply Sat 31 Oct, 2009 02:35 pm
@Walter Hinteler,
But, what about the Louvre?....yes that bastion of art and culture in Paris will soon have a McDonald's on its premises. C'est dommage!

photofan
tsarstepan
 
  1  
Reply Sat 31 Oct, 2009 02:51 pm
@photofan,
That is a deeply disturbing faux pas allowed by the museum's administration. Quelle domage!
0 Replies
 
parados
 
  2  
Reply Sat 31 Oct, 2009 02:56 pm
@Walter Hinteler,
Considering the US has never gone to war with a country that has a McDonald's,
how can we be sure this isn't some evil plot by Obama to drag us into war with Iceland?
tsarstepan
 
  1  
Reply Sat 31 Oct, 2009 03:00 pm
@parados,
That's a cause to enlist for!

And as Teddy Roosevelt decreed, "In any moment of decision the best thing you can do is the right thing, the next best thing is the wrong thing, and the worst thing you can do is nothing."

and

"Get action. Seize the moment. Man was never intended to become an oyster."

Iceland can be our pearl! Razz
0 Replies
 
saab
 
  1  
Reply Sat 31 Oct, 2009 03:48 pm
@parados,
Can a Nato member get into a war with another Nato member?
Maybe the Icelander would surrender if they get hamburgers.


0 Replies
 
 

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