ICELAND: McDonald’s checkmated!
SPRAGGETT ON CHESS
Iceland has one of the highest standards of living on the planet. This small country of 320,000 inhabitants also boasts the highest number of grandmasters per capita: 9. We were told that this is because of the long cold winters and the people , having to stay inside, became very fond of the game of chess. But apparently this is not the real reason: if truth be told, then Iceland simply has the smartest people!
Last week McDonalds announced that it was closing its only 3 outlets in the country because it can not make any money in Iceland! The Icelandic people are clearly not impressed with Big Mac….and the multi-national is in full retreat.
Iceland has much more to worry about than Big Macs
1 November 2009
By Robert Jackson in Reykjavik
Iceland found itself on the world’s front pages again last week, but surprisingly it was not due to revelations of a new financial scandal, nor the latest details of an IMF bailout package.Instead, it was something far more mundane: McDonald’s had announced that it would be packing up its golden arches, stowing away its McFlurries and leaving the country.
In the normal run of things, the closure of three burger joints would not hit the headlines even on the slowest news days. But the departure of McDonald’s means Iceland now finds itself among a small number of economies around the world – including Barbados and Bolivia – which could not cut the capitalist mustard and keep its McDonald’s going.
Iceland’s relationship with the fast food chain has never been straightforward. It was the first country out of the 123 in which McDonald’s operates where a central downtown restaurant failed.
The chain was also hampered by good quality local competition and having to import many essential ingredients from Germany.McDonald’s was never able to gain the traction it needed to open more than three restaurants.Iceland watchers have been quick to point out that it was in 1993, at the early stages of Iceland’s emergence from obscurity, when the that former prime minister David Oddsson chomped his way through Iceland’s first quarter pounder.
From that first fateful bite, they trace a perfect arc – the trajectory of which leads through prudent growth and then debt fuelled madness to inevitable collapse.The grim reality of Iceland’s economic woes means that the country’s 320,000 inhabitants have more pressing concerns than the departure of Ronald McDonald.
Some $10 billion-worth of loans from the IMF and a basket of loans from European countries are needed to stabilise an economy that, at its peak, saw its financial institutions borrow close to $80 billion from international capital markets, and then default. Tax rises and swingeing budget cuts are inevitable as prime minister Jóhanna Sigurdardóttir’s coalition government attempts to balance the books and steer the beleaguered economy out of the red.
Households are feeling the pain, with a recent poll showing that 50 per cent are in negative equity, while nearly an equal number of businesses are technically insolvent.Against a backdrop of rising unemployment and a currency that buys less than half of what it could last year, Icelanders are facing an extended period of austerity.But while, in simple economic terms, the country is in crisis, day-to-day life goes on pretty much as normal.
The boom years saw Iceland invest heavily in infrastructure, and a drive around the capital city, Reykjavik, reveals some of the best schools, hospitals and housing anywhere in Europe.While spending cuts are going to hit hard, they will be in services that are of the very highest quality. Even when the cuts come into full effect, Iceland will still offer one of the best standards of living to be found on the planet.
The shock and anger felt by Icelanders as the full extent of the economic crisis unfolded is slowly being replaced by a palpable sense of nationalism.The weak currency has meant that more Icelanders holidayed at home than in recent decades, and the nation’s theatres are seeing performances sell out as soon as they are announced.
McDonald’s departure may indeed be symbolic, but not in the way it has been portrayed internationally. Instead, it could be seen as a manifestation of an independent people returning to their roots, turning their back on the profligacy of recent years in an attempt to close an embarrassing chapter in their country’s history.
BigMac Index
The most expensive Big Macs are sold in Switzerland and Norway, where the burger costs about $5.75, according to the Economist 2009 BigMac index. The cheapest are sold in South Africa, $1.68, and China, $1.83, the index shows.
AND WHAT ABOUT BURGER KING??
BURGER KING ICELAND CLOSES!
http://www.therightperspective.org/2009/11/01/now-burger-king-iceland-closes/
The company operating the Burger King franchise in Iceland has announced it will follow the lead of its fast food competitor McDonald’s and close both stores today.
Like McDonald’s, BK Iceland managing company Tankur ehf cites the rapid devaluation of the Icleandic krona as fault, making importing the necessary items to run a proper franchise too expensive.
But, unlike McDonald’s, which is ending operations completely, the Burger King stores will reopen under a new name and continue selling delicious flame-broiled burgers. Tankur ehf also runs two TGIF Fridays franchises in Iceland. The company says both those stores are doing well.
Burger King began operating in Iceland in 2004.
SPRAGGETT ON CHESS