Let’s be honest upfront: Iceland is expensive. A sit-down dinner in Reykjavik with a glass of wine can run $90–135 for two people. A coffee at a tourist café on Laugavegur is $5–6. A mid-range lunch at the wrong spot can set you back $25 before you’ve had dessert.
But here’s what most travel guides don’t lead with: you can eat genuinely well in Iceland: real food, warm food, food you’ll actually remember — for around $20 a day. Not by starving. Not by eating sad granola bars in your hotel room. By knowing exactly where to go and how to structure your meals.
This is that guide.
First, Understand How Iceland Works
The biggest mistake students make in Iceland is eating like they’re in Italy or Japan — ordering from menus, sitting down three times a day, adding drinks. That approach will drain your budget in 48 hours.
The play in Iceland is simple: eat your biggest meal at lunch, not dinner. Many of Reykjavik’s better restaurants run lunch specials between 11:30am and 2pm that are dramatically cheaper than the same dishes at dinner, sometimes half the price for the same kitchen. Build your day around that.
The second principle: the grocery store is not a backup plan. Bónus, Iceland’s budget supermarket chain (you’ll recognize it by the yellow sign with the pig), stocks skyr, bread, deli items, premade soup, and snacks at prices far lower than anything you’ll find at a restaurant. A good Bónus breakfast costs around $3. That gives you more room to spend on the one meal of the day that’s worth paying for.
One more thing: the tap water in Iceland is free and exceptional. It’s cold, naturally filtered through lava rock, and genuinely delicious. Bring a reusable bottle and refill it everywhere. Never buy bottled water here.
The Hot Dog: Start Here
If there’s one food that defines budget eating in Iceland, it’s the pylsur — the Icelandic hot dog. These aren’t the limp, forgettable things from a gas station cart. They’re made with a mix of Icelandic lamb, pork, and beef, served with crispy fried onions, raw onions, sweet mustard, ketchup, and remoulade on a steamed bun.
Bæjarins Beztu Pylsur has been operating a kiosk near the Reykjavik harbor since 1937. At around $4–6 per hot dog in 2025–2026, it’s one of the best meals per dollar you’ll find in the country. Order “ein með öllu”, that’s “one with everything”, and you’ll be eating exactly what locals eat.
It’s a snack, not a full meal on its own, but as an afternoon bridge between lunch and a light dinner, two hot dogs for under $12 is hard to beat.
Budget: ~$4-6 per hot dog
The Bread Bowl: Your Best Lunch Option
Icelandic Street Food on Aðalstræti is where most budget-conscious visitors have their single best meal in Iceland. The concept is simple: traditional Icelandic soups served in a hollowed-out crusty sourdough loaf, with free unlimited refills.
The lamb soup is the one to get — a thick, hearty broth loaded with tender Icelandic lamb, carrots, turnips, and root vegetables, the kind of recipe that’s been warming people up here for generations. The fish stew and shellfish soup are also on offer. You can refill with a different soup each time, and dessert (pancakes, cake, cookies) comes free at the end.
At around $17 per bowl, it’s not technically under $20 as a standalone meal — but it is an all-you-can-eat lunch that will keep you full for the rest of the day, which changes the math entirely. Budget students tend to treat this as their one real meal, then bookend it with a Bónus breakfast and a hot dog in the evening.
Go early or expect a wait. It fills up fast.
Budget: ~$17, all-you-can-eat
Noodle Station: The Warming Bowl You’ll Come Back To
Noodle Station does one thing: large, generous bowls of Thai-inspired noodle soup at around $14–17. That’s it. No menu sprawl, no tourist pricing, no gimmick. You pick a broth — beef, chicken, or vegetable — choose your spice level, and a massive warming bowl lands in front of you.
In a city where the wind cuts right through you by mid-afternoon, this is often exactly what you need. It’s consistently named one of the best value meals in Reykjavik, and for good reason.
Budget: ~$14-17
Bónus Supermarket: Your Daily Anchor
Make Bónus your first stop after landing, and visit it every day. It’s the cheapest supermarket chain in Iceland (Krónan is a close second), and it stocks everything you need to keep your food budget from spiraling.
Here’s what to buy:
Skyr. Iceland’s traditional thick dairy product – high protein, low fat, slightly tangy, and deeply satisfying. It’s far cheaper here than anywhere else in the world. A large container runs about $2–3. Eat it for breakfast with some bread and you’ve started the day well for under $4.
Bread. The Bónus own-brand loaves are the best value. Dense rye or whole grain bread keeps you full and pairs well with anything.
Deli items and premade soup. Bónus stocks vacuum-packed premade lamb soup (brands like 1944 are popular) that you can heat up if your accommodation has a kitchen or microwave. At around $10-13 for a large portion, it’s a genuinely good deal.
Fruit and snacks. Bananas, apples, and basic fruit are available and reasonably priced by Icelandic standards. Stock up for between-meal energy on day trips.
One important note: you cannot buy alcohol at Bónus. Iceland’s alcohol is sold exclusively at government Vínbúðin stores, which are significantly more expensive. Budget accordingly, or pick up duty-free at the airport on arrival (the cheapest option by far).
Budget: Breakfast from Bónus: ~$3-4 | Full self-catered day: ~$10-12
What a $20 Day Actually Looks Like
Here’s a realistic day that keeps you under budget and doesn’t feel like deprivation:
Breakfast: Skyr + bread from Bónus – ~$3–4
Lunch: Lamb soup bread bowl at Icelandic Street Food – ~$17
Afternoon: One hot dog at Bæjarins Beztu – ~$5
Drinks all day: Tap water from your reusable bottle – $0
Total: ~$25-26 slightly over $20, but you’ve had an authentic all-you-can-eat Icelandic lunch and eaten well all day. Swap the bread bowl for Noodle Station (~$14) and you land right at $22-23.
On days when your program includes meals, or when you self-cater fully from Bónus, you can come in well under $15.
What to Skip
Restaurants on Laugavegur (the main tourist strip). The food isn’t necessarily bad, but you’re paying for location. A burger meal that would cost $14 elsewhere runs $19–25 here. Save Laugavegur for a drink or a coffee, not a full meal.
Bottled water. At $1 per bottle, it sounds cheap. It adds up, and the tap water is better anyway.
Restaurant drinks in general. A local beer at a Reykjavik bar runs $10–12. If you want to drink, pick up beer at Vínbúðin (much cheaper than bar prices) and save it for wherever your group ends up for the evening.
One Splurge Worth Considering
If your budget has one meal with room to breathe, consider the lunch menu at one of Reykjavik’s mid-tier restaurants — places that serve proper Icelandic lamb or Arctic char at around $20–30 for a two-course lunch special. Restaurants like Snaps Bistro or Kaffi Vinyl run these regularly. It’s the one moment where Iceland’s food culture clicks into place: local ingredients, properly prepared, at a price that’s still meaningful but not reckless.
The rule applies everywhere but especially here: save the splurge for something that’s genuinely worth it.
Frequently Asked Questions: Eating Cheap in Iceland
How much should a student budget for food per day in Iceland?
A realistic daily food budget for a student in Iceland is $18–25. That covers a grocery store breakfast (skyr and bread from Bónus for around $3–4), one budget restaurant meal at lunch ($14–17 at Icelandic Street Food or Noodle Station), and a hot dog snack in the afternoon ($4–6). On days when your program includes meals, or when you fully self-cater from Bónus, you can come in well under $15.
What is the cheapest food to eat in Iceland?
The cheapest foods in Iceland are the Icelandic hot dog (pylsur) at around $4–6 at Bæjarins Beztu, skyr from Bónus supermarket at $2–3 per large container, and grocery store bread, deli meats, and premade soups. Tap water is free and exceptional — fill a reusable bottle everywhere you go.
Where is the best budget restaurant in Reykjavik for students?
Icelandic Street Food on Aðalstræti is the top pick — all-you-can-eat lamb soup or fish stew in a sourdough bread bowl for around $17, with free dessert. Noodle Station is the runner-up at $14–17 for a large, warming bowl of Thai-style noodle soup. Both are consistently recommended as the best value meals in the city.
What is Bónus and why should students shop there?
Bónus is Iceland’s cheapest supermarket chain, identifiable by its yellow sign with a pig logo. It’s the best place for budget self-catering: skyr, bread, deli items, premade lamb soup, fruit, and snacks are all significantly cheaper here than at other stores. Krónan is a close second. Note that alcohol is not sold at any supermarket in Iceland — it’s only available at government-run Vínbúðin stores.
Is tap water safe to drink in Iceland?
Yes. Iceland’s tap water is cold, naturally filtered through volcanic rock, and considered some of the cleanest drinking water in the world. It is free everywhere. Bring a reusable water bottle and never pay for bottled water in Iceland.
What is skyr and is it worth trying?
Skyr is Iceland’s traditional dairy product — similar to a thick Greek yogurt but technically a fresh cheese. It’s high in protein, low in fat, and has a mild, slightly tangy flavor. It’s been a staple of the Icelandic diet for over a thousand years and is much cheaper here than anywhere else. A large container from Bónus costs $2–3 and makes an ideal breakfast or snack.
What should students avoid spending money on in Iceland?
Skip bottled water (use the tap), drinks at sit-down restaurants (beer runs $10–12 a glass), and anything along the main tourist strip on Laugavegur where pricing reflects location rather than quality. Buy alcohol at Vínbúðin or duty-free at the airport on arrival — both are significantly cheaper than bar prices.
Does GLO offer a study abroad program in Iceland?
Yes — GLO’s Iceland Seminar brings U.S. university students to Reykjavik for a program that combines academic learning, company visits, and cultural immersion. Students have structured program activities alongside free time to explore the city and surrounding landscape. Visit glo-explore.com for program details and upcoming dates.
Ready to Study Abroad in Iceland?
Iceland rewards students who stay curious and budget smart. Between the midnight sun, the lava fields, and a capital city that punches well above its size, there’s no shortage of reasons to go — and with the right food strategy, your wallet won’t be the thing holding you back.
GLO’s Iceland Seminar combines hands-on academic learning, company visits, and cultural immersion in one of the world’s most unique destinations. If you’re interested in what that looks like, explore the program — or check out our study abroad scholarships to see what funding might be available.
For more budget food guides from GLO destinations, see our guides to cheap food in Italy and cheap food in Japan.
Faculty: Looking for a study abroad program that pairs academic rigor with real-world global experience? GLO has partnered with U.S. universities for over 45 years to design programs students remember long after graduation. We’d love to connect.
GLO (Global Learning Opportunities) has been designing transformative study abroad programs since 1977. With 33,000+ alumni and 650+ seminars worldwide, we build experiences that go beyond the classroom.
