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Iceland Losses Its Last Few McDonalds Locations

AP | GUDJON HELGASON and JANE WARDELL | Posted 05.25.2011 | Business

REYKJAVIK, Iceland — The Big Mac, long a symbol of globalization, has become the latest victim of this tiny island nation's overexposure to the world financial crisis.

Iceland's three McDonald's restaurants – all in the capital Reykjavik – will close next weekend, as the franchise owner gives in to falling profits caused by the collapse in the Icelandic krona.

"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.

Lyst was bound by McDonald's requirement that it import all the goods required for its restaurants – from packaging to meat and cheeses – from Germany.

Costs had doubled over the past 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.