Cook Fast, Die Young: Reykjavík’s Restaurants In Possible Crisis

It feels appropriate that Icelanders didn’t have much in the way of a summer from 2017 through 2019. During the same period, many of Reykjavík’s restaurateurs also faced a long winter, finding it hard to escape the looming shadow of bankruptcy.

A slight reduction in foreign visitors to our shores has had an outsized impact as restaurants rely on tourist revenue more than any other small business—except the stores selling the plush puffins and googly-eyed rocks we hold so dear. The recent bankruptcy of Iceland’s only low cost airline, WOW Air, hasn’t helped. Whatever the reason, we have seen a number of food and beverage businesses having to pull down the shutters for the last time this winter—and rumours suggest that we haven’t seen the end of the unfortunate trend.

Bye bye bearnaise

The opening and closure of the extravagant seafood restaurant Skelfiskmarkaðurinn last year provoked a great deal of media attention, but they were far from alone. We also had to say goodbye to the restaurant at Hótel Holt [It was reopened few months later as Holt Restaurant], Borðið, Nora Magasin, Argentina Steakhouse, Bazaar restaurant, Laundromat (though it’s soon to re-open), Rósenberg, Vegamót (reopened as Bastard Brew + Food), and Hverfisgata 12 (immediately reopened as Systir). Some were downtown institutions; others barely had a chance to take the plastic off the marble. Yet others have been forced to reduce opening hours or days to cut costs. We even saw a record shattered as Spanish restaurant LOF had to close its doors after only three months of operation.

The trend isn’t singling out restaurants. Downtown’s only independent fishmonger, Kjöt & Fiskur, closed in 2018 after a promising start. Even middle-of-the-road donut and coffee spots like Kornið and Dunkin’ Donuts called it quits.

For people outside of Iceland, this may not seem particularly severe, but it’s worth keeping in mind that this is happening in a city of only 120,000 people. And all of the businesses mentioned above were within spitting distance of the central downtown stretch of Laugavegur (Reykjavik’s high street) so their locations couldn’t be any better.

So what’s going on? How did we get to this point, and is it all doom and gloom? Of course, each story is different and you will get different answers depending on whom you ask. So we reached out to some people in the food business for answers.

Too many cooks

It’s never been easy to run a restaurant in Iceland. Much of the produce needs to be imported, and the size of the population means that we are reliant on the peaks and valleys of tourism. With the recent influx of tourists, Reykjavík definitely saw a spike in restaurateurs setting up shop to feed the incoming hordes.

“If the suburbanite will won’t come to the food, then the food must go to the suburbanite.”

One such restaurateur is Ragnar Eiríksson, formerly of Dill and Hótel Holt, currently of wine bar Vínstofan 10 Sopar, who is sceptical of blaming the tourism downswing outright.

“I don’t believe the business itself has gotten that much harder,” he says. “Yes, we have more restaurants than a decade ago, but we also have more tourists than a decade ago. The problem is that restaurateurs often get dollar signs in their eyes and over-invest, and it can be really hard to pay back that investment in this business.”

The rent is too damn high

In some cases, greed and hubris played a part. However, that doesn’t paint a complete picture. No one who has tried renting or buying in downtown Reykjavík needs to be told about the sky-high rental prices and many claim that this has played a major role in the recent spate of business closures.

“The high down-payments and rental guarantees are definitely one of the issues,” says Jóhanna Jakobsdóttir, the owner of recently-shuttered Nostra on Laugavegur. “This and the fact that all the cost of renovation falls on the tenant’s shoulders. Elsewhere in Europe you have a tradition of grace periods and landlords taking a more active role in establishing the business to ensure success—but you don’t hear about that here.”

Where do we go now?

It’s easy to join in the Greek chorus of doom and gloom, but people in the restaurant business are no strangers to the struggle. Many solutions have been proposed.

“I definitely agree with the role of the landowners and landlords,” says Erna Pétursdóttir of Ramen Momo. “We need to establish the shared interest when opening a restaurant. Nobody should be benefitting from a bankruptcy. Some of these changes may need to be pushed into being by the government, through new regulations or tax incentives.”

New horizons

Another organic solution may be coming, as an increasing number of ambitious food businesses are venturing out into Reykjavík’s satellite towns and neighbouring municipalities, from the new, industrial-located Mathöll Höfða to the Ölverk pizzeria and brewpub in Hveragerði.

It makes sense on paper. People like to be able to grab a bite and a beer after work without having to fork over the value of a UK plane ticket to a local taxi firm. If the suburbanite will not come to the food, then the food must go to the suburbanite. Will this spell the end of downtown Reykjavík’s role as the hub of Iceland’s food culture?

“Will it result in new regulations? New ways of doing business? Or will the trickling of talent into the suburbs turn into a flood?”

Run with the dogs tonight

Ásgeir Þór Jónsson of the Brauðkaup bakery in Kópavogur doesn’t think so. “I think we’ll see more businesses moving to the suburbs,” he says. “This is normal. You don’t see people only dining out on La Rambla or in Manhattan, except the tourists. And it does seem like our little neighbourhood bakery is part of a bigger trend you see with places like Von in Hafnarfjörður. But 101 Reykjavík will continue to be the ‘go to’ place for a night out. That’s not about to change.”

Eiríkur Örn Þrastarson of Mathús Garðabæjar agrees, saying: “People said this concept wouldn’t work outside the centre, all the way over in Garðabær. But we like to think we proved people wrong, and played a role in this trend. Two years later we’re still seeing increases.”

Can I offer you an egg in these trying times?

Going out to dinner is justly considered a luxury for many, but sustaining a vibrant restaurant scene is not a luxury—it remains a vital component of Reykjavík’s future as a viable tourist destination, and essential for maintaining the city’s quality of life.

Whatever the future holds, things look like they are boiling over in downtown Reykjavík. Will it result in new regulations? New ways of doing business? Or will the trickling of talent into the suburbs turn into a flood? For now, it remains to be seen.

This article have been updated.

*It was stated in the first draft that Hótel Holt had closed, but it was the restaurant at Hótel Holt that was closed to be accurate.