Not All Golden Under the Arches

Fast food giant McDonald’s seems to be one of the few big guys not feeling the economic crunch.  In fact, McDonald’s seems to actually be doing better.  It seems pretty obvious that quick and cheap food would prevail in an economy where people have less time and even less money.  But this generalization cannot be applied everywhere.  Iceland, which is home to three franchises, is closing down all McDonald’s locations next weekend.  The collapse of the Icelandic Krona has caused the restaurant’s profits to plummet showing that the chain is not invincible throughout the world.  Franchise owners were having a very difficult time keeping the food accessible because of high import tariffs on imported goods.  The price of a Big Mac was already pretty pricey at 650 krona, which is about $5.30.  But now, in order to create any sort of profit, the price would have to be raised at least 20% resulting in a 780 krona ($6.36) Big Mac.  Currently, the most expensive version of the sandwich is in Norway where it costs $5.75.  This really shows that no business is globally indestructible, because if any were, it would be McDonald’s.  The same structure simply cannot work in every country.  Iceland is really facing difficult times, after the credit crisis tore apart their banking system, resulting in a severely damaged economy.  Unlike Americans, icelanders will not be able to bury their economic woes in the dollar menu.

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