No more happy meals for citizens of Iceland
Our current global financial crisis will have at least one positive effect: Iceland will now be completely devoid of the Golden Arches.
McDonald’s, the mightiest of fast food chains, is closing shop and jumping ship.
All three franchised stores in the country will be closed as a result of Icelanders getting hit especially hard by the recession.
In fact, Iceland was one of the first European countries to experience the recession’s effects.
The nation of roughly 320,000 people was forced to take a $2.1 billion loan from the International Monetary Fund and saw a significant devaluation of the Icelandic krona.
After the major banks in Reykjavik crashed, Icelanders began criticising the right-wing government for their free market model and blame politicians in part for the crisis. Since 2008, the recession in Iceland started pushing people towards cheaper local goods rather than spending on imported novelties.
Icelanders began substituting conspicuous consumption (such as mink and whale sashimi, and lobster tails), for more traditional foods (like black pudding and blood sausage). This change in consumer choice is a reflection of the economic situation and the McDonald’s story is an extension of this.
But anyone can afford a Big Mac, right? Wrong. Icelanders pay a beefy $7.44 for the signature Big Mac burger, making Iceland one of the world’s most expensive McDonald’s options.
Since the chain in Iceland is not profitable, the owner of the stores, Jon Gardar Ogmundsson, is calling it quits. He will be reopening under a different name with a focus on providing local products instead of the imported McDonald’s fare. Granted, Ogmundsson is a businessman looking to make a profit, but the local produce option is motivating and current.
It is interesting to note that the financial crisis dented even a corporate superpower like McDonald’s. And it is interesting how it appears the failure of the transnational chain in Iceland could bolster domestic production for the country. When it comes to local products, it is hard to tell if this will create a reaction in other burger chains, but only time will tell.
For now, I support the fact that an American corporation is bowing out of a Nordic country. Hopefully, many locals are “lovin’ it” as much as I am.
2 Comments
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Daesonesb Nov. 8, 2009, 1:02 p.m.
I think most Icelandic locals are probably very concerned that not even McDonalds, one of the hardiest multinationals out there, can survive in their current economy. The Icelandic currency is so devalued right now that it makes buying of imports near impossible. That is the reason cited in more responsible coverage of this story for McDonald's being so expensive in Iceland.
For people whose only education about international trade is
Buy local dude,this might seem great , however it is symptomatic of a larger Icelandic problem. A quick scan of the Wiki entry on the Icelandic Economy shows Iceland's primary imports to bemachinery and equipment, petroleum products, foodstuffs and textiles. With the Krona so weak, affording these things will be much greater of a concern than affording a Big Mac. If they can't afford the staples of growth, how will they recover from the hit they took from their US investments?But yeah, the aesthetics of the whole thing is more important, right? I'm sure everyone in Iceland is just
lovin' itright now.Oh, and a quick fact check. A Yahoo! Finance article, authored by the AP, reads that,
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.Even if one translates the higher figure of the two into CDN dollars, that only amounts to $6.80.Daesonesb Nov. 8, 2009, 1:02 p.m.
I think most Icelandic locals are probably very concerned that not even McDonalds, one of the hardiest multinationals out there, can survive in their current economy. The Icelandic currency is so devalued right now that it makes buying of imports near impossible. That is the reason cited in more responsible coverage of this story for McDonald's being so expensive in Iceland.
For people whose only education about international trade is
Buy local dude,this might seem great , however it is symptomatic of a larger Icelandic problem. A quick scan of the Wiki entry on the Icelandic Economy shows Iceland's primary imports to bemachinery and equipment, petroleum products, foodstuffs and textiles. With the Krona so weak, affording these things will be much greater of a concern than affording a Big Mac. If they can't afford the staples of growth, how will they recover from the hit they took from their US investments?But yeah, the aesthetics of the whole thing is more important, right? I'm sure everyone in Iceland is just
lovin' itright now.Oh, and a quick fact check. A Yahoo! Finance article, authored by the AP, reads that,
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.Even if one translates the higher figure of the two into CDN dollars, that only amounts to $6.80.