Iceland on a budget - Where to Eat

Iceland can be expensive, there is no way around that. But there are many options available to you for keeping your costs low, especially when budgeting for food and drinks. Although you should definitely try some traditional Icelandic food as part of your travel experience, it would be expensive to do that every day of your trip. Fear not, We'll tell you where you can find some cheap eats to keep the budget in check.

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ICELAND ON A BUDGET - WHERE TO EAT

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Take Advantage of Happy Hour

Most people are familiar with the happy hour concept where for a few hours a day, bars offer drinks at a deal. In Reykjavik though, they take it to the next level! Beer is a relatively new thing in Iceland, with its prohibition ending only in the 1980s. To be precise, the ban was lifted on 1st of March 1989, resulting in Beer Day being celebrated every 1st of March since then. I'd say that's a great time to visit, wouldn't you?! ​
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Although now legal, alcohol is highly taxed in Iceland and therefore making it expensive. You will find costs sitting at around 1500 Krona for a pint, that's about $18 Canadian. Ouch! However, Icelandic happy hour saves the day! Obviously, it will vary by establishment, but I found happy hour deals to generally cut restaurant beer prices in half. My favourite Reykjavik restaurant that you need to check out was Saeta Svinid Gastropub on Vesturgata street. Look for a sign with a pig on it and make sure to stop by! 
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While you're planning your Iceland trip, make sure to check out our hiking guide to the Kjalvegur trail!

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Look out for Accommodation Specials

Although these will differ depending on where you stay, generally each hostel or hotel will have some specials food and drink. I stayed at Hlemmur Square Hostel which had a few options to help cut costs. Of course there was the famous happy hour, where beer was 750 krona or $9 CAD for a draft beer. But what I like most about this hostel was ‘The Square Meal’ - which happened to be reasonably priced and tasty - a traditional Icelandic meal served with lamb. It was delicious and a good way to get that off your Iceland bucket list without paying high tourist prices. Take these kinds of saving options into consideration when making your bookings. Oh yeah, this hostel also has free coffee - a life saver for those who live on this type of fuel! ​
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Eat Noodles

If you’ve had your fill of traditional Icelandic food and are just looking to save, start with Noodle Station. In an area where restaurants are heavily priced, this no frills location stands out. Prices are reasonable and servings are large enough to share if you’re really looking to save. 
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You'll need a good meal to hike out to see this waterfall!

Get your Hot dogs!

Strangely enough, Reykjavik is known for its hot dogs! You’ll be able to locate many vendors while strolling through the city, but only one has consistently been considered the best. Baejarins Beztu Plysur is a must stop to get your cheap food fix! At about 450 Krona or 5.50 CAD, these hot dogs are a pretty cheap option to keep you going.

Not only will they save you precious dollars, but they are delicious and the the celebrity list of patrons doesn’t lie. The stand has been visited by the late Anthony Bourdain (No Reservations), Bill Clinton (former president of the USA) and James Hetfield (from Metallica).
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For the Vegan Foodies

Maybe hot dogs aren’t your thing... or meat in general. It can be difficult to find affordable food to eat in Iceland when you have dietary restrictions. If you're looking for good vegan food, you have to check out Kaffi Vinyl. Although more expensive than the others on this list, this spot has many vegan options at relatively good prices and coolest of all a huge vinyl collection. Make sure to check it out. ​
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Baked Goods are a Must

This place is too cool not to mention. The spray painting facade of the Broad & Co bakery means you’ll be able to find it with no problem! Although it doesn't offer complete meals, it's perfect for breakfast as it has all the goodies necessary to keep you going on your tour of the city: coffee, muffins, cinnamon buns, scones, etc. All delicious looking and relatively cheap. I had a simple muffin and coffee and it was very tasty!

Take note though that this spot is popular so make sure to get there early (opens at 6 am everyday) as later in the morning there will be a lineup and potentially less selection. 
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Delicious vegan sandwich at Kaffi Vinyl

Kaffi Vinyl

Grocery Stores are Your Friends

It’s obvious that food from a grocery store will be cheaper than eating at a restaurant, but there are some additional ways to save when it comes to Iceland’s grocery stores. It is essentially a must to shop for food and supplies from a discount grocery store. There are a few budget grocery store chains, Bonus and Kronan for example. Bonus is easy to spot with its giant pig symbol. I seem to be easily swayed to shop at places which have pigs as mascots apparently! 
 
I landed in Reykjavik early on a Sunday and my food shopping options were limited before heading out for a Landmannalaugar hike. Unfortunately, I had to pick up some food from a convenience store which I found out costs double or triple the amount for the same items at a grocery store. With a little bit of planning, getting the majority of your supplies at a discount grocery store will ensure that you stay in budget. 
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My favourite find at the grocery store was the Skyr yogurt - make sure to try it!
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Liquor Stores 

It’s a big budget bust to buy beer at a grocery store. Although the price doesn't differ much from beer at a proper liquor store, quality and alcohol content does. The offerings in the grocery stores and gas stations are almost non-alcoholic. Icelandic alcohol laws state that drinks not sold in state run liquor stores or bars have to be less than 2.25% alcohol content. So unless non-alcoholic beverages are your thing, get your booze at one of Iceland’s liquor stores. Vinbudin stores are found throughout Reykjavik and offer a great selection. 
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Duty Free

Iceland is expensive because the government has taxes on many goods, especially alcohol and tobacco. Take advantage of duty free at the airport and stock up. I some cases you can save up to 50% shopping at the airport. There are limits for each person, make sure to ask sales staff what you are allowed to take with you.
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Look out for the graffiti facade for the best bakery in Reykjavik!

Come here for the best hot dogs!

Water Bottles

Icelandic water is some of the best water you will ever taste in your life. Nothing beats the pure taste of glacier water, and in Iceland it comes right through the tap! I can't stress enough the importance to bring a refillable water bottle - it will save you loads of money and keep a few more plastic bottles out of landfills!
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Tipping

A lot of places around the world, and especially in North America, tipping at drinks and food establishments have become the norm. Mostly to supplement the terrible wages restaurant owners are allowed to give their employees. However, this is not the case in Iceland. Restaurant employees are generally paid a good wage and Icelandic prices actually already include taxes and any applicable gratuities! Tipping is not a part of their culture, however, no one will say no to free money. But at the end of the day don't feel obligated to tip, it's not considered rude in any way. 
 
HOWEVER, though not food related, I should mention that there are occasions where you should provide a tip. For instance, many free walking tours are offered. These tour guides are doing this as their work and though they offer the tour free of charge, it is expected that you will contribute a tip at the end of the tour to show your appreciation. You may also want to tip your tour bus drivers and other guides as you see fit.

Overall, Iceland is definitely not a cheap place to travel. For the budget conscious traveler, it's important to establish a realistic budget and stick to it, especially when it comes to food. Restaurant and grocery expenses always seem to go into a black hole until you get the final tally at the end of the month. What you eat is important but don't let it make you go broke! Be sure to use these food saving tips to save money on your upcoming Iceland trip!
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