Cheap Eats Reykjavik: The Real Numbers

Reykjavik does not look cheap, and a sit-down dinner in the centre will confirm that within one glance at the menu. But cheap eats Reykjavik is a real category once the search widens past restaurants: a hot dog stand two minutes from the harbour, bakeries open before 7 AM (before 7 AM), food halls with a dozen counters under one roof, and supermarkets that sell the same skyr a hotel breakfast charges for. This page settles what those options cost, where they are, and what nobody publishes a number for.

Where the value actually sits

A visitor pricing Reykjavik against a home city menu is comparing the wrong thing. Iceland's restaurant and hotel price level sits at 167.3 against an EU27 average of 100 for 2024, the latest figure published by Eurostat: eating out here costs roughly two thirds more than the EU average, not a little more. That single figure explains why a plate that would read as mid-range at home reads as expensive in the centre of town, and it is worth knowing before comparing any menu price to one from elsewhere.

Food prices in iceland Reykjavik move within that gap rather than closing it, and the direction is upward: the consumer price sub-index for restaurants and cafes rose from 98.5 in August 2025 to 103.3 in August 2026, about 4.9 percent over twelve months. Restaurant food and hotel breakfast carry Iceland's reduced VAT rate of 11 percent rather than the standard 24 percent, which is one of the few things pulling the other way.

Among the best affordable restaurants in Reykjavik are not restaurants at all in the usual sense: a hot dog stand, a handful of bakeries, and the soup counters that come up again below. Judged against a Reykjavik sit-down bill, a hot dog and a filter coffee together cost less than a starter alone at most central restaurants.

The bakery route

Most visitors budget for restaurants and forget that bakeries in Reykjavik open early, serve real food, and are meant for a fast, cheap stop rather than a lingering meal. Braud & Co on Frakkastigur opens at 06:30, earlier than any restaurant, but it posts no prices at all, so it cannot be budgeted for in advance the way the rest of this page can. Its hours and the other bakeries are covered under Icelandic food.

Sandholt on Laugavegur, open 07:30 to 18:00 every day, is a sit-down bakery-cafe rather than a counter, and cheap food Reykjavik at Sandholt means the toasted sourdough with jam and butter at 1,390 ISK, the cheapest plate on its own menu, alongside skyr with lemon cream at 1,490 ISK. Filter coffee is 650 ISK. Anything past those two plates leaves the cheap-eats range.

Tap water in Reykjavik and across Iceland is drinkable straight from any tap, according to the city's own tourist board, which removes bottled water from a food budget entirely.

Food halls and the lunch special

A common assumption is that Reykjavik restaurants cheap means fast food, when the more useful category is the lunch special: many sit-down places drop their prices sharply between roughly midday and early afternoon, turning an otherwise expensive kitchen into a fair one for an hour or two. Food halls work the same way from any hour, since a dozen counters under one roof let a group order separately and split a table, keeping each plate closer to a snack price than a restaurant one.

Among cheap places to eat in Reykjavik, the honest budget standard is the soup counter: Icelandic lamb soup, kjotsupa, made with lamb, potatoes, carrots and turnips, is a staple in the Icelandic diet especially in the colder months and is very often served with a free refill. Plokkfiskur, a creamy fish stew of boiled cod or haddock, mashed potato and onion, paired with rugbraud rye bread, is the other standard, and both are cheaper hot meals than almost anything else sit-down in the centre.

Supermarkets are the other half of the budget. Bonus is Iceland's best-known discount chain, Kronan is generally considered one of the most affordable grocery stores in the country, and Pris, a newer chain, is built around low prices, according to the city's own tourist board. A block of skyr, bread and fruit from any of the three costs a fraction of the same items served at a table.

The hot dog, done properly

Most guides mention the hot dog without saying what it costs or where the original stand actually is. The best cheap eats Reykjavik has to offer starts at the harbour: bæjarins beztu pylsur Reykjavik sits on Tryggvagata, opposite Harpa, and has stood there since the 1960s after moving two streets from where it was founded in 1937. One with everything, eina med ollu in the phrase to use at the window, costs 880 ISK, and what goes on it is fixed by the order rather than chosen. Add a Coke and the combo runs 1,330 ISK, the figure Icelandic media itself tracks as a cost-of-living marker.

The Tryggvagata stand runs Sunday to Wednesday 09:00 to 01:00, Thursday 09:00 to 02:00, and Friday and Saturday 09:00 to 06:00, so the queue is longest right after the bars close; a visit mid-afternoon avoids it. A second branch at Austurstraeti 10-11, two minutes away and close to where the business began, is open 24 hours every day if the harbour stand is shut or busy.

What is missing from the numbers

No official body publishes what a main course costs in a mid-range Reykjavik restaurant. Statistics Iceland's price tables cover the consumer price index and the restaurants-and-hotels comparison against the EU, not a single plate. Anyone assembling a list of the best cheap restaurants in Reykjavik from a search engine is looking at menu prices collected by third parties, not a government figure, and this page states the hot dog, the bakery and the supermarket numbers precisely because those come from the operators and from national reporting, and leaves the rest without a number rather than inventing one.

Fermented shark, hakarl, is sold in Reykjavik supermarkets and is usually taken with a shot of brennivin; the city's tourist board describes it plainly as having a strong ammonia-like smell and a taste that can be challenging, since the shark meat is toxic fresh and is fermented and hung to dry for months. It costs little as a supermarket item and is one of the cheapest ways to try something distinctly Icelandic, on a plate rather than a restaurant tasting menu.

Common questions

Is the Baejarins Beztu hot dog stand cash only?

The stand does not publish a payments policy on its own site; card payment is standard across Reykjavik, including at food stalls, so bringing cash is not necessary in most cases.

Are food halls cheaper than a sit-down restaurant?

Each counter in a food hall prices its own plate independently, and a group can order from several without paying a shared table markup, which keeps the total closer to a casual meal than a restaurant bill.

Does tap water in Reykjavik cost anything at a restaurant?

Tap water is drinkable and free throughout the city, including at restaurants, so there is no need to order bottled water with a meal.

Is a hotel breakfast worth paying for over a bakery?

Hotel breakfast typically runs 07:00 to 10:00, which suits a later start, while bakeries like Braud & Co open from 06:30 and cost less for anyone leaving before the hotel buffet does.