McDonalds Tells Iceland - Burger Off
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Are the forces of globalisation in retreat? Consumers in Iceland are about to join those in Albania and Bosnia and Herzegovina - they will no longer be able to buy a Big Mac.
The BBC and others report today on the decision by McDonalds to withdraw from the Icelandic market. They currently have three outlets in a nation with a population of around 300,000.
Lots of good economics and business studies in the story. The key issue is costs and lack of profits. The McDonalds franchise in Iceland imported their stocks from Germany. But their costs had almost doubled, with the falling Icelandic krona making imports prohibitively expensive.
The Guardian explains that a Big Mac in Reykjavik sells for 650 krona (£3.22), but the 20% price rise required to make a decent profit would have increased it to 780 krona (£3.86), which would have made the Icelandic version of the burger the most expensive in the world.
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