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  • When you think of global fast food, Titans you probably think of McDonald's.

  • The chain has restaurants in more than a hundred countries and has been a

  • household name in America since the 1950s.

  • But there is one European state where McDonald's failed to capture national

  • attention: Iceland. McDonald's tried for over 15 years to

  • make it in Iceland but in 2009 the local franchise closed its three remaining

  • stores with no plans in return. So what went so long for McDonald's in Iceland?

  • To answer that, let's go back to the McDonald's first entered the market in

  • 1993. At a time when the isolated island nation was shifting toward a free market

  • economy and becoming more globalized, then Prime Minister David Adson took the

  • first bite of an Icelandic McDonald's hamburger at his grand opening. It was

  • seen as a sign of the country finally entering into the modern globalized

  • world. When McDonalds opened up [in] 1993, I have never ever in my life seen such an opening in one

  • restaurant. There were lines for days outside the restaurant and they were

  • selling thousands and thousands of burgers every day. But then you know

  • after honeymoon is over, the people it was just a usual thing. And locals, was

  • welcomed the American fast food chain because it symbolized the country

  • pulling away from isolation and nationalism. The opening of the franchise

  • kind of symbolized in Iceland and a hard time entering into a global community. As

  • some scholars have pointed out that in relation to marginal countries or

  • countries that feel themselves a little bit marginal, getting international

  • franchise can be important as a as kind of affirming that you are part of a

  • global community or a community of nations. But in 2008, the global economic

  • collapse hit the small country of roughly 300,000 people. The stock market

  • and its three biggest banks collapsed in almost every business in the country

  • nearly went bankrupt. Thousands of people lost their savings and Iceland erupted

  • in protests. The Krona lost roughly half its value and higher tariffs translated

  • in some much higher import prices. That made it difficult for foreign brands

  • that were dependent on imports to maintain its profit margins without

  • drastically raising its prices. According to the owner of the McDonald's Iceland

  • franchise, the chain imported its raw ingredients from Germany. The franchise

  • owner told the media that prices spiraled so out of control that for kilo

  • of onion in Germany he was paying the equivalent of a bottle of good whiskey.

  • In contrast with McDonald's and also Burger King which closed at a similar time as McDonald's closed.

  • Those were sourcing materials from outside Iceland and the two restaurants in question closed in 2008/2009 following the economic crisis.

  • So it simply wasn't cost effective to have such large share of materials for the fast food.

  • McDonald's Icelandic franchise owners said that in order to

  • remain business and make a profit McDonald's would have had to hike up

  • it's a Big Mac price by 20% to $6.36 that would have made it the most expensive Big Mac in the world at the time.

  • Switzerland currently holds that title with its $6.82 Big Mac.

  • In 2009, the franchise announced that it would be closing its three outlets with

  • only a weeks notice. Blaming high operational cost.

  • McDonald's local franchise partner in Iceland was a firm called "Lyst." The managing director

  • of the McDonald's franchise to mediate that business had actually never been

  • better at the time it pulled out of the country. He told media that the

  • restaurants had never been this busy before. But at the same time profits had

  • never been lower. Icelandic media reported that tens of 15,000 people

  • patronized McDonald's daily in its final days of operation. 2008 marked a time

  • when several businesses decided to exit Iceland, including McDonald's rival Burger King and Pizza Hut, which closed all but one outlet.

  • Just like McDonald's, Burger King's source their products from abroad.

  • The fast food giant's that did exit Iceland had trouble competing with

  • restaurants that sourced their ingredients locally. But other analysts

  • say high import costs affected everyone. Even the businesses that used homegrown ingredients.

  • And the difference between the chains that succeeded in Iceland after the crisis and the ones that failed all boils down to management.

  • Companies that survived were companies that had usually either finance

  • themselves in a more conservative manner and/or maybe simply got better

  • assistance from the banks and other companies. So in the case of, for example,

  • McDonald's that company was highly indebted with foreign currencies when

  • they went bankrupt. Iceland has long been.known for its overpriced food and its

  • high cost of living. In 2018, Iceland was ranked the second most expensive country

  • in the world. A typical sit-down meal will cost you around $20 to $40.

  • Local fast-food owners say keeping prices consistent is the key to

  • surviving in Iceland. Keep your reasonable and if you keep quality good. If you have consistency...

  • This is the key consistency. consistency, consistency, then you can survive in almost any business.

  • After closing, McDonald's Iceland franchise lost the McDonald's signage and renamed the stores Metro.

  • This new chain uses locally sourced food to keep costs low and is still operating today.

  • And not all American fast-food chains left Iceland during the financial crisis.

  • We've seen places like KFC. They did not close. They survived the economic crisis and

  • I mean main difference is that they had most of the raw materials for their

  • foods is grown in Iceland. So I guess they were back draws because of that. And things are getting better

  • in Iceland. Its economy is bouncing back and it's proving to be an inviting place

  • to do business. According to the Economic Freedom Index, which looks at a country's

  • business and investment freedom, Iceland ranks fifth among European countries and

  • Icelanders are opting to eat out. Young Icelanders eat fast food on average

  • every other day spending an average of $220 US a month Iceland. Has also

  • become a hot destination for tourism. As of 2017 the number of foreign visitors

  • to Iceland has more than quadrupled since 2010. With excellent economy

  • looking bright, tourism climbing and residents enjoying the most school fast

  • food options, there might be hope for McDonald's to make a come back in the Nordic region.

When you think of global fast food, Titans you probably think of McDonald's.

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Why McDonald's Failed In Iceland

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    joey joey に公開 2021 年 04 月 20 日
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