Dunkin' Donuts tests Iceland market once too tough for McDonalds

Dunkin' Donuts has just opened a store in Reykjavik, almost six years after McDonald's closed its Iceland restaurants. Pictured: Dunkin Donuts store in Seoul, South Korea. Photo / iStock

"Donuts! Is there anything they can't do?" well-known pastry lover Homer Simpson once asked.

In Iceland, which has languished under capital controls for seven years, they've just become the latest sign the north Atlantic Island is shedding the last vestiges of its 2008 economic and financial collapse.

A Dunkin' Donuts franchisee on Wednesday opened its first store in Reykjavik, drawing crowds eager for a first taste of the U.S. chain's baked goods and coffee. It was almost six years ago that McDonalds closed its restaurants as the nation descended into economic chaos.

"I love the variety they offer," said Steinar Gunnarsson, a student, who visited the restaurant soon after it opened. "They offer more than just a couple of brands of doughnuts usually found in Icelandic bakeries."

Drangasker, the franchise holder, has the right to open as many as 16 restaurants in Iceland over the next five years, according to Chief Executive Officer Arni Petur Jonsson.

"Over the next five years I'm sure we'll fully utilise that option," said Jonsson, also the CEO of a chain of Icelandic convenience stores called 10-11. "The fact that we had more than 200 people lining up outside before the store opened - and there's still a line outside the restaurant - shows that there's plenty of interest in Dunkin' Donuts in Iceland."

The island in June unveiled plans to lift capital restrictions in place since 2008, saying creditors in its failed banks can either agree to pay the Treasury as much as $3.8 billion or face a one-time tax of about $5.1 billion. The winding-up committees of the banks have yet to formally decide on which path to take.