Why McDonald's Failed In This Nordic Country

If you look at a list of countries that don't have McDonald's restaurants, some of the entries like totalitarian North Korea, for example, probably come as little surprise. However, some are more unexpected. While the burger giant has set up shop in much of Europe, there's one notable holdout — Iceland.

Still, this was not always the case. The chain actually opened in the country and failed, shutting down its three restaurants there. McDonald's came to Iceland in 1993 with some fanfare, with then prime minister Davíð Oddsson chowing down on a burger to celebrate the opening, which was seen as a symbol of the isolated country hitching its wagon to a more globalized international economy.

However, the Great Recession changed things. While the United States bailed out big banks that were failing, Iceland didn't, and its three biggest financial institutions went under. The exact reasons are complex and only partly linked to the broader economic turmoil, but the country had what was widely described as a financial meltdown. Icelanders lost savings and many businesses failed. International brands faced particular challenges. Because Iceland's currency lost much of its value, the imports that McDonald's relied on, including basics like onions and meat, became extraordinarily expensive. Prices for items like the iconic Big Mac would have had to jump by at least 20 percent, so the brand simply gave up and closed all Icelandic McDonald's within a week in 2009.

In spite of the financial mess, the company's Icelandic franchisee reported that sales were actually at a peak when the chain went out of business; 15,000 people visited daily in a country of less than 400,000 people. Yet, thanks to the high import costs, it simply couldn't turn a profit. It didn't help that some local competitors were better able to survive, as they relied on locally-grown goods. (For example, Iceland produces burger joint essentials like beef and potatoes domestically.) While there have been claims McDonald's failed in Iceland due to a boycott, there's no truth to this. It was completely due to the financial crisis.

McDonald's locations in Iceland were ultimately converted to a local chain called Metro with a roughly similar menu but ingredients that come from within the country itself. While Iceland has recovered economically, there are no public signs that McDonald's is planning a comeback there.

And if you're craving a fast food burger in Iceland, don't go looking for Burger King either. It also doesn't have a presence there, having also withdrawn for reasons related to the financial crisis. KFC and Domino's did manage to survive, though, because they used more local products on their menus. (Domino's also appears to have adjusted its menu to local tastes, featuring cream cheese-based pizzas.) Still, if it's burgers you want, you'll have to settle for a local option — perhaps a better way to spend your vacation dollars.