Iceland Says Goodbye to the Big Mac

Iceland’s only three McDonalds are going out of business. The reason was that they simply could not remain profitable. This was due to the global economic meltdown in which lead to a drop in the value of their currency. And the Iceland McDonald’s owner was bound to an agreement which forced him to source their ingredients from Germany. High tariffs and the drop in the Krona, Iceland’s currency, raise a Iceland Big Mac from an already expensive $5.29 to $6.36, which made it the most expansive Big Mac in the world. The profit was simply not there with the current economics in place.

The interesting part of this story for me, as a fan of local food, is that the owner of the three Mcdonalds plans to reopen the restaurant under a new name, Metro and source his food locally. This means that 90 people get to keep their jobs, local food producers get a cut, and the owner can actually make a profit. Everyone wins except McDonalds. (Read a full article on this story)

I like this story because of the “Out with McDonalds and In with Local Food” theme, but there is more here than a local food victory lap. The idea is that McDonalds bailed on a country rather than trying to source ingredients locally. They also lost economically favorable circumstances, which made their business in Iceland possible. Similar favorable circumstances like cheap oil, a drive thru culture, and subsidies to the corn and soy industries make McDonalds profitable here in the US. If they lost favor and had to compete on a level playing field with locally sourced food, they might lose out like they did in Iceland.

Local has become a buzzword in food marketing in that last couple of years, but I never hear it coming from fast food. The economies of scale of fast food makes it hard for them to source locally, and that trend does not seem to be going away anytime soon. Will we ever see a “Local Big Mac?” Probably not, but who needs it. The burger I make from grass fed beef from the farmers market on an avalon bakery bun with Michigan cheddar cheese is way better than McDonalds will ever be, and its about the same price. The rub is that without all of the subsidies, McDonalds would not even cost mush less. In fact it probably would cost more because of the transportation costs.

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5 responses to “Iceland Says Goodbye to the Big Mac

  1. The burger you make from grass fed beef from the farmers market on an avalon bakery bun with Michigan cheddar cheese is way better than McDonalds will ever be, I agree, but I couldn’t make it for the same price as a burger at McD

    Here’s my math:

    1/3 lb locally raised grass fed ground beef patty (TMZ has a 30% off special going on right now or the price would be higher = $1.60

    Avalon bakery bun – not sure but I am guessing it’s at least 25 cents

    Grassfield’s Lamont cheddar – it’s $9.50/lb, but have you tasted it? It’s awesome! I got some last summer in Grand Haven. Let’s put an ounce on your burger – that would be about 60 cents right there.

    I think your burger costs $2.45. You can buy a burger at McD for $1 plus tax. Eating locally a something that many people can’t afford to do…isn’t that a shame?

    I enjoy your blog – would love to read a post about feeding the hungry with local food during these difficult times. Your thoughts?

  2. MK,

    Point well taken.

    Thanks for the good words about my blog.

    I looked on the McD dollar menu, http://cep.mcdonalds.com/dollar/, and I did not see a 1/3 LB burger.

    They had a double cheeseburger on the dollar menu which probably was more like a 1/4 LB, but the 1/4 pounder cost $3 or more. I think if we create a quarter pounder, the price is pretty close.

    And you know I would be putting some awesome Grassfield’s Cheddar on my burger too. I could go cheaper and use the local provolone they sell at plum market for $6 per pound.

    I love the subject of local food on the cheap. I will get some posts on the subject up soon.

    What would you suggest a budget/standard to shoot for, for a low cost local meal?

    CB

  3. The quarter pounder cost $3? Wow! I haven’t eaten at McD in a long while. I just saw an ad for a double cheeseburger costing $1 at McD, though. I don’t really pay attention anymore now that my kids have outgrown their love of the golden arches. Love the idea for local food on the cheap….I’ll dig out some of my ideas!

  4. As far as I’m concerned any single McD’s branch going out of business is a good thing.

    Allison
    @
    http://lastbite.blogspot.com

  5. Pingback: Canada Grocery Stores Goes Local « Last One Eating

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