And McDonald's wants dollars. So Island would need to pay McDonald's and all other companies outside Island in dollars (or
Which McDonalds? McDonalds USA headquarters, McDonalds Island edition?
McDonalds Australia still buys meat, bread, lettuce, etc and I'm sure they pay for it in AUD, not USD.
Why couldn't the Island Maccas pay for their ingredients in BTC?
Island's economy would not be an isolated system. Their economy would still be heavily dependent on trading with other countries and large international corporations. So the price of goods and services in Island would still be determined for the most part by the world economy which today in turn is based on the U.S. dollar and other big currencies.