McDonalds Gets Cold Shoulder in Iceland
Category: McDonalds Published on Tuesday, 27 October 2009 00:49
The 3 McDonalds in Iceland have been shut down - victims of the World Wide Recession. According to the Associated Press:
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.
Apparently the issue was both currency and importation issues:
The franchiser 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, making it impossible for the company to raise prices further and remain competitive with competitors that use locally sourced produce.
The prices are a little steep as well:
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).
The fast food places will be reopened as local diners and use local materials and resources. The entire staff is being retained.
The new restaurants won't be accepting McDonalds Gift Cards or Coupons.
Unanswered: What happens to the Ronald McDonalds Costume?