Crisis leaves Icelanders without fast food restaurants
Magnus Ogmundsson, executive director of Lyst Hr, told journalists of the London Times: 'The economic situation on the island has made running McDonald’s restaurants too expensive.' Two factors are to blame: the sharp fall of the Icelandic krona and a clause in the contract that requires purchasing everything needed for the restaurants in Reykjavik, from packaging to all products without exception, in Germany.
Before the crisis, this condition did not cause particular inconvenience. However, the collapse of the local currency last autumn and high import duties on imported products made McDonald’s restaurants unprofitable. To remain competitive, prices must be raised: for example, the Big Mac, which sells in Reykjavik for 650 kronur ($5.24), would need to go up by 20%. But for 780 kronur ($6.23), according to Ogmundsson, no one will buy the popular sandwich, because such a high price does not exist anywhere in the world. By the way, currently the most expensive Big Macs are in Switzerland and Norway, where in US dollars, as calculated this year by The Economist magazine, they cost $5.69.
Magnus Ogmundsson also reported that the decision to close the restaurants was made after several months of searching for a solution and in full agreement with the brand owner. In Oak Brook, Illinois, where McDonald’s headquarters is located, Theresa Riley, a press representative of the world's largest fast food restaurant company, confirmed that the Icelanders' decision is correct and that a search for new partners in this country will not be conducted for now.
Ogmundsson, in turn, stated that his company is unlikely to sign a new contract with McDonald’s. Lyst Hr plans to open restaurants under a new brand – Metro – and now use local products and materials. All 90 people who worked in the popular fast food restaurants, the director promises, will keep their jobs in the new establishments.
BY THE WAY
The first McDonald’s restaurant opened in Reykjavik in 1993, when everyone was talking about the Icelandic economic miracle. The first citizen of the country to taste a Big Mac was then-Prime Minister David Oddsson.
McDonald’s, whose network spans 119 countries, has already lost entire countries. For example, in 1996, due to poor financial results, the only restaurant in Barbados was closed. And in 2002, for the same reasons and to save costs, outlets had to be closed in seven countries at once.
Sergey Kuznetsov. 