“We don’t want Laugavegur to become a restaurant street” Skip to content
Reykjavík walking district laugavegur
Photo: Photo: Golli. Pedestrians walking down Reykjavík’s busiest street, Laugavegur.

“We don’t want Laugavegur to become a restaurant street”

City officials and restaurateurs are at odds about whether the ongoing expansion of the downtown shopping and dining district is actually good for businesses long-term, Vísir reports. On one hand, officials say that more shops and restaurants have opened in the last 18 months than closed. On the other, local restaurateurs point to the recent closure of several long-running downtown restaurants of note, saying that the influx of restaurants is overwhelming the market. But city officials say they will not be setting a cap on the number of restaurants that open in the area.

Among the Reykjavík restaurants that have closed recently are Dill—previously the only restaurant in Iceland with a Michelin star—as well as its sister restaurant (the aptly named Systir) and Óstabúðin, a cheese and charcuterie shop that also operated a popular café. The latter shuttered only this week, and in an interview about the closure, owner Jóhann Jónsson remarked that the business environment in downtown Reykjavík has become particularly difficult because so many restaurants are entering the market. Restaurant owners have to contend with competition not just from other sit-down venues, he said, but also food trucks.

Jóhann also noted that there are 35,000 seats for diners in downtown Reykjavík alone. For perspective, per Statistics Iceland, the population of Iceland was 360,390 at the end of the second quarter of 2019. So currently, just under 10% of the population could sit down for dinner in downtown Reykjavík at the same time.


“This is about protecting shopping downtown”

Many restaurant owners have spoken out in recent months to say that the city is issuing too many permits for restaurants in downtown Reykjavík. According to Sigurborg Ósk Haraldsdóttir, the chair of the city’s Planning and Transportation Board, there is only a quota in place to control the number of shops that are allowed to be on specific downtown streets.

“In reality, this is about protecting shopping downtown because we think that’s important,” she said. “Restaurants are allowed to come in when the quota of shops has been filled on those streets. That’s where the oversight comes in. We don’t want Laugavegur to become a restaurant street—that would be monotonous and it would lose its draw. That’s why we want to keep the stores there.”

As the number of tourists have increased on Laugavegur, more opportunities have been made for stores to open on the main street and, as a result, more restaurants were given permission to open as well. However, this increase in restaurants has mostly occurred on side streets that cross Laugavegur, or in nearby neighborhoods such as in the area around Hlemmur, the former bus station turned food hall, and Grandi, a former warehouse district near the waterfront on the west side of town.

Sigurborg Ósk says that downtown expansion is happening quickly, and that demand is driving the number of restaurants that want, and are being given, permits to open. “Downtown has really gotten a lot bigger in recent years and in the future, it will reach all the way up to Suðurlandsbraut.” (Laugavegur becomes Suðurlandsbraut east of Kringlumýrabraut and runs along Laugardalur on the east side of Reykjavík.)

“There is a certain market prevailing here and if there is demand for more restaurants, then more restaurants will open,” Sigurborg Ósk continued. “I think it would be very unusual for us, as the government, to directly intervene in that.”


“Downtown is booming like never before”

Sigurborg Ósk says that downtown is the most sought-out area in Reykjavík. It is responding to an international trend, she says, wherein people opt not to go to large shopping centers, but rather focus on downtown districts where they can experience the everyday life of a place and local food culture.

“It’s safe to say that there are more places opening than closing and downtown is booming like never before.”

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