Burger bust-up

The world's largest fast-food company announced that all three of its restaurants in Iceland, operated by the company Lyst and owned by franchisee Jon Ogmundsson, would shut down at midnight on October 31.

Ogmundsson has run the McDonald's restaurants since 2004. He told Reuters news agency the decision to close the restaurants was not due to a lack of demand, but the severe weakness of the Icelandic krona and high taxes on food imports.

McDonald's franchise policy requires all resources for its restaurants, including packaging, meat, vegetables and cheese, to be imported, as the Icelandic market is too small to produce the required products itself.

"I've sold more hamburgers in the last few months than ever before, but the cost is prohibitive. It just makes no sense," Ogmundsson said. "For a kilo of onion, imported from Germany, I'm paying the equivalent of a bottle of good whiskey."

Ogmundsson said he planned to launch a new burger chain that would serve locally sourced food at his three locations under the name Metro.

Iceland's banks collapsed at the height of the global credit crisis, devastating the country's economy and leaving it dependent on a $10 billion aid package led by the International Monetary Fund.

McDonald's Europe said in a statement that it would not seek a new partner in Iceland due to the state of its economy and the complexity of doing business doing business in an island nation of just 300,000 people on the edge of the Arctic Circle.

sje/Reuters/AFP

Editor: Sean Sinico