McDonald's Corp will shutter its business in Iceland because it is too expensive for the franchise to operate after the country's financial crisis.

The world's largest fast-food company said on Monday that all three of its restaurants in Iceland, operated by franchisee Jon Ogmundsson, would stop operating at midnight on October 31.

Ogmundsson has run the McDonald's restaurants since 2004. He told Reuters that the decision to close the restaurants was mainly due to the severe depreciation of the Icelandic krona and high taxes on imported food.

Instead, he will launch a new burger chain at his three locations with locally sourced food under the name Metro.

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

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.

Ogmundsson said the cost of raw materials used in McDonald's meals had doubled in the last 18 months, and that there was little hope Iceland's economy would pick up enough to make the business viable.

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 there.

(Reporting by Omar Valdimarsson in Reykjavik and Martinne Geller in New York; Editing by Toni Reinhold)