This is the notion that in the long run exchange rates should. The decision to shutter the Icelandic franchise was taken in agreement with McDonald's Inc., Ogmundsson said, after a review of several months. The index, which compares the price of a McDonalds Big Mac around the world, is based on the theory of purchasing-power parity (PPP). That would have made the Icelandic version of the burger the most expensive in the world, a title currently held jointly by Switzerland and Norway where it costs $5.75, according to The Economist magazine's 2009 Big Mac index.
But the 20 per cent increase needed to make a decent profit would have pushed that to 780 krona ($6.36), he said. Lyst was bound by the requirement by McDonald's that it import all the goods required for its restaurants - from packaging to meat and cheeses - from Germany.Ĭosts had doubled over the last year because of the fall in the krona and high import tariffs on imported goods, Ogmundsson said, making it impossible for the company to raise prices further and remain competitive with competitors that use locally sourced produce.Ī Big Mac in Reykjavik already retails for 650 krona (US$5.29). "The economic situation has just made it too expensive for us," Magnus Ogmundsson, the managing director of Lyst Hr., McDonald's franchise-holder in Iceland, told The Associated Press by telephone on Monday.
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