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October 27, 2009

Iceland's crisis costs it McDonald's, Big Macs

Iceland was maybe the last wealthy country to get McDonald's fast-food restaurants. Writing in the Guardian, Alda Sigmundsdóttir says they first arrived in 1993. Reykjavik has three. Now they're closing, victims of the global financial crisis, which hit Iceland especially hard. Iceland's currency, the krona, has plunged, which means the country can't afford the imports it once enjoyed. So the irresistible march of globalization and its herald, the Big Mac, suffer a setback.

As Yglesias points out, in many countries McDonald's operators reduce currency risk by buying local supplies with the local scrip as much as possible. Perhaps they could source fishburgers in Iceland, but the potatoes and beef and chicken may have been a problem.

Sigmundsdóttir blames McDonald's strict specs:

Apparently McDonald's has very stringent standards when it comes to production of its foodstuffs. For a market as small as Iceland's, it is not economically viable to invest in the equipment required to churn out, say, chicken nuggets. Hence most ingredients have had to be imported from a massive McProduction plant in Germany.
Posted by Jay Hancock at 10:03 PM | | Comments (1)
Categories: The Great Recession
        

Comments

Not a big loss. I hope America would do the same thing and save on Health costs

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About Jay Hancock
Jay Hancock has been a financial columnist for The Baltimore Sun since 2001. He has also been The Baltimore Sun's diplomatic correspondent in Washington and its chief economics writer. Before moving to Baltimore in 1994 he worked for The Virginian-Pilot of Norfolk and The Daily Press of Newport News.

His columns appear Tuesdays and Sundays.
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