McDonald's to quit Iceland

McDonald's is to quite Iceland  AP Photo/Jeff Roberson

McDonald's is to quit Iceland as a result of the financial crisis.

The McDonald's franchisee in Iceland has decided to shutter all his stores as a result of the financial crisis in the country. This will come as something of a surprise to those who think that junk food outlets will boom in the bad times. People still want to eat out, they just eat out in cheaper places, goes the thinking, so high end restaurants fail and burger joints do well. This decision to shutter all of the  (all three of them) McDonald's outlets in Iceland  would seem to contradict this story.

However, everything is not quite as it seems. It isn't that the three burger joints are going to close: they will reopen under the name "Metro". It's just that they will no longer be McDonald's. And the reason for that is a combination of the fallen exchange rate and the rules that McDonald's itself imposes. Mickey D's insists that everything served in every restaurant has to be up to its standards. To this point it makes sure that a store or franchise cannot simply purchase materials from anywhere: they must come from an approved supplier. But if you've a country with only three restaurants, well, there just isn't enough action for there to be a local approved supplier. So everything is imported: yes, even something as simple as onions. And as the franchisee says, this just no longer makes sense:

For a kilo of onion, imported from Germany, I'm paying the equivalent of a bottle of good whiskey.

So it's not that there won't be burgers in Rejkyavik, it's just that they won't be McDonald's ones and can thus be made from much cheaper local ingredients. Who knows, they might even taste better: how tough could that be?