Iceland

A Guide to Icleland. What to do?

Gauti B. Eggertsson (Last revised Jan 2th 2023, subject to revision in light of new informations or ideas.)

I am Icelandic and pretty much all my family lives there (aside from my own production of 3 boys). Apparently, long since I left (which was 1997), Iceland has become very popular for tourism, even in the winter time.

I get an email, I would guess, at least once a month on average from friends or friends of friends that are going to Iceland and are asking for suggestions. Since I’ve written the response email so many times, I figured I should just create a shortcut on my homepage, which I otherwise (WARNING!) reserve for economics research. That is why you are reading this.

After preparing this, I heard from fellow Icelandic econ nerd Jón Steinsson that he had done something similar. I am appending his “guide” at the end of this. There will be repetitions across the two, but they may be interesting to you, I don’t have the energy to merge them ex post.

The stuff I list here is pretty Reykjavik centric – that is where I used to live – simply because I know more about stuff there. But you should keep in mind that the island is big, and there are actually lots of things to do also in the northern, north-western and eastern part (Reykjavik is in the south-western part), not to mention in the highlands. Moreover, those places tend to have a lot less visitors. However, most people that contact me are just staying for a few days, and planning staying in Reykjavik, so these recommendations are more geared towards that sort of visit.

A few things to do in country-side that is quite close to Reykjavik (as in 3 hours driving radius):


1. Blue Lagoon. One of the classic things most tourist always seem to do in Iceland, is to go to the Blue Lagoon. It is basically warm geothermal little lake that is, well, blue. When I was growing up nobody really went there. But when I started visiting Iceland from the US as a ´tourist´ I’ve taken people there and actually enjoyed it very much. And they have a bar now in the middle of the lagoon. If you are going from Reykjavik you can use the trip to see a bunch of interesting stuff on the Reykjanes, like “Kleifarvatn” – a lake that is on the way, and “Krísuvík”. There is a bunch of organized tours that do this in a day, here is one example here (I have no particular experience with this company, there are many others). Note that these days you may need to reserve in advance.

2. And now there is actually a close equivalent in Reykjaviki itself that opened a couple of years back, called "Sky Lagoon". I has a beautiful view over the ocean and nice saunas and such. I've gone a few times and really liked it. Again, you may want to reserve in advance. But beware, for some reason there is a age limit of 12.

3. Before moving the country side, there is actually a pretty nice way of getting a "sense" for it even before leaving the city. It's called "Flyover Iceland," see here. You get seated in these things that make you feel as if you are in an airplane and then they show you spectacular scenary. My kids really liked it and it was short and snappy, about 15-30 minutes in total.

4. Golden Circle. The other classic thing to do is the “Golden Circle”. This involves seeing Geysir (which is where the word geysir comes from, so I think it explains itself), Gullfoss which is a very big waterfall and then Þingvellir. Thingvellir is the original parliamentary grounds of Althingi – the Icelandic parliament – which is now a natural park. It is very pretty. There are tons of tour companies that do the Golden Circle and there are often quite a few tourists in each location. But it is for a good reason, it’s a pretty nice thing to do in a day or so.

5. Dyrhólaey og Kirkjufjara are pretty cool to visit. You can have lunch or dinner in a small fishing village close by, called Vík í Mýrdal (or Vik). I have had some of the best lobster I have ever had there. I am sure they are still going strong with at least a couple of good restaurant options.

6. I like walking up Snæfellsjökull, the glacier featuring in Jules Verne “Journey to the Center of the Earth”. You can walk it up in a day, it takes perhaps total 4 hours, although it can take longer, depending on how far up you drive. There is a very nice hotel you can stay at overnight, Hótel Búðir, that I´ve stayed at a few times.

7. Northern lights. If you are there in the winter time, you may want to figure out if you can see the Northern lights. Growing up I did not think it was such a big deal, but apparently people love seeing that stuff. Nowadays there are even organized tours that try to track them down.

6. If you like horseback riding there are lots of places where you can do this (here is one example). The Icelandic horse is pretty unique, it is the only breed allowed, and dates back to the settlers that brought them from Norway in 9tth and 10th centuries. The Icelandic horse displays two gaits (skeið and tölt) in addition to the typical walks, trot and gallop displayed by other breeds.

7. There is the trip called inside a volcano (see here) in an organized tour. There there is a 12 year age limit. You have to reserve. I've done it and it was quite nice. While I did not think actually going into the volcano was all that exciting, it was a nice hike back and forth, and one got served a delicious traditional Icelandic soup.

A few things I am planning to do one day, but have not gotten around to doing, so I know this only from second hand.

8. I have heard that it is great fun to go up on glaciers in a snowmobile. But I have yet to try it.

9. Apperently you can now see Iceland in a helicopter. I´ve never done it but am pretty sure it must be pretty awesome even if pricey.

Few things to do in Reykjavik:

1. First of all, if you stay in a hotel in Reykjavik, you are best off staying down town Reykjavik. If you are looking for something economical but hip, Kex is a good option I think (even if I have not stayed there myself), while a more upscale example is Hótel Borg.

2. The pub scene is very good in Iceland and if you like alternative music there is much of that floating around. You can find listings for what is happing (and many other things) in Reykjavik Grapewine. I´m too old to know what are the trendy places anymore, but when I was growing up we always used to go to Kaffibarinn. I´m pretty sure it is still popular, and I think it should certainly give you a good sense of an Icelandic bar.

3. There is very good food in Reykjavik and plenty of good restaurants. Nowadays there are so many tourist (especially in summer) that you may wish to make reservation. Obviously you should try fish, one place I like for example is called Höfnin. Restaurants also sell whale meat nowadays I have noticed – mostly for tourists I think -- this was not really a thing when I was growing up. I tended to think of whale meat as a second rate stake, you could not really get it in restaurants as far as I can recall. The best fish I have had recently in Iceland (I write this in 2023) is at Sjávargrillið (see here). It was phenomenal. But important to reserve well in advance.

4. If for some reason you would like to figure out what “traditional” Icelandic food looks and taste like, the only thing I can come up with is Múlakaffi where I´m pretty sure you can get smoked sheep head (svið), rotten shark (hákarl), dry fish (harðfiskur), burning wine (brennivín) and so on and on. I am personally not a fan of what is called traditional food in Iceland, with the exception of dry fish.

5. When I was going to bars growing up, we would always end the night going to a hot-dog place called Bæjarins Bestu. I have yet to find a better hot-dog anywhere. Ask for one “with everything” (með öllu). It is right in the middle of town in a little shack.

6. Go to a public outdoor swimming pool in Reykjavik (or in fact in any other city or village in Iceland, everyone has at least one, for the hot water is basically free as it is geothermal), just to get a sense of what they are, regardless of the time of the year you are travelling (they are no less popular in winter than summer). This is where a lot of locals go, some many times a week. You can swim if you like, but most people go there for the hot tubs and saunas. They are highly subsidized by the townships, so they are cheap but very very clean (more on that below).

7. If you have kids, you should certaintly go to Húsdýragarðinn. It is a place where they have bunch of animals the kids can pet, but also stuff to do like rides you see in themeparks (on a very small scale for little kids). I have only gone there in the summer, and it was great (my kids were 3, 6 and 9), I do not know anything about how it is in wintertime. It is a place where lots of Icelanders take their kids, I don´t recall seeing all that many tourists there, which was odd but welcome.

Couple of things NOT to do in Iceland:

1. Don´t buy bottled water at hotels. The water is great from the sink. Clean and fresh. Bottled water in Iceland at hotels is water they poor from the sink into a bottle and put a price tag on it.

2. Everywhere I travel in the world I hop in a taxi at the airport and to downtown. The damage can never by more than 100 bucks, give or take. Iceland is the only place I don´t. Do not step foot in a taxi at the airport! It is a rip-off. It will set you back several hundred dollars last time I checked. I´ve had several friends contact me ex post, thinking there was a mistake in currency conversion. There is a very convenient bus that goes to Reykjavik for a reasonable price. Take it. (this was written some five years ago, as I re-read this now, so things may have changed. Also, I understand uber may be coming, which would be a gamachanger)

3. If you go to a public pool (which you should) be aware that this is where most Icelanders go at all times during the year, it is sort of a gathering place. OK, so Icelanders feel strongly about their pools. In particular they expect you to wash yourself very well before entering – especially your privates --- a policy strictly enforced (see this classic sketch linked, which may seem like an exaggeration, but I can assure you it is only mildly so!).

4. Don´t believe weather forecasts and prepare for anything. The weather in Iceland is pretty much completely unpredictable, as far as I can tell. Moreover, it can change within five minutes. One minute there is clear sky and sun. Then it starts snowing. Even when it is the peak of summer, you can very well expect quite cold days, like late fall in the US, even below freezing during the night. An empirical observation related to weather: I never remember any of my grandparents wearing shorts, even in summer. Growing up I don´t really remember wearing them either if not doing sports, where we tended to wear shorts, because that is what the people in foreign lands did on TV.

5. On a more sad note: When I was a kid I don´t recall seeing many tourists in Iceland. Now there are a lot. One aspect of this is that the country is not really equipped for tourist, there are few directions, and lots of ways to get yourself in trouble. Do a bunch of cool hikes, travel to the shore and so on. But keep in mind this is not Disneyland. You can find yourself alone against the elements if not careful. You should not go out hiking in the middle of the Icelandic highlands in sneakers and T-shirt without a clear idea of where you are going. That is a receipt for disaster. Every year there are several tourists that get lost, giving rise to extensive search and rescue operations, and some tragically die. Also, when you walk on some of the beautiful beaches (like a famous one called “Kirkjufjara” – a great place to visit), be very careful of the waves. Every now and then a tourist gets swept out because they get too close, and a large wave crashes in and pulls them into the ocean. Some of them live to tell the tale, others do not, there are some very recent sad examples. Bottom-line is that Iceland is beautiful and safe, but you have to take reasonable precautions.

Other questions, stuff, observations:

What is a good time to go?

You can go anytime. It is very dark in the winter, during the darkest period (December) it is only light between 11am to 3pm. This has the one benefit that then you have a reasonable chance of seeing the Northern Lights. It’s pretty cold, but not as cold as you might think, for example, not as cold as, say, Minnesota at its coldest (not that this is a great selling point!). You will have snow in the highlands and sometimes in the city depending on the year. The summer, in contrast, is the brightest, it is not dark during the night at all. June 21st is the brightest day of the year. My preference in the summer is something like second or third week in July.

A few cultural things, social cues, etc:

1. Pretty much everybody speaks English.

2. People bump into you all the time, say at the store, in cinema, etc, without saying sorry. Especially in bars. This does not mean they want to fight with you. It is just the norm. They really just sort of go with the flow.

3. Icelanders do not really know the concept of a lining up for anything. If you see anybody standing in line, it is probably tourists.

4. When Icelanders say stuff like “Yes,” they often do it while breathing in. It is sort of weird. But don’t freak out. Nobody is chocking.

5. When I was growing up I recall people always asking foreigners: “How do you like Iceland?” Constantly. I am pretty sure it is still that way. Icelanders love nothing more than hear how other people think their country is fantastic. BW, this question – which you will hear multiple time – is not an invitation to an honest discussion. Icelanders are not too keen on constructive criticism about their country. Stick with the hyperbole. In my family there is still discussion of the German tourist who responded to this important question with: “I miss the trees”. This was not looked upon fondly.

6. If you see somebody ride an Icelandic horse, don’t call it a pony to its owner. Yes, I know it looks like a pony. It is small and sturdy. But people take great pride in the Icelandic horse. When I was growing up riding was considered a man’s-man sport, you would do it drinking burning wine and using chewing tobacco or snuff. Calling the beloved Icelandic horse a pony makes it sound like something that has pink ribbons and is used for little girls. Not a discussion you want to have with an Icelandic horsemen that is halfway down a bottle of Icelandic burning wine and has a mouth full of tobacco (ready to spit).

7. People tend to be very nice, and may even be helpful sometimes. But there is not the same type of “service culture” as in the US where the motto is “the customer in always right”. Not so in Iceland. If you start complaining about something, like say your hotel room, or the manner in which your fish is being cooked, and the person you complain to think you are being ridiculous, it would not surprise me if he/she would say exactly that: “You are being ridiculous” and then explain to you in great detail the reason why this or that is done so and so “in Iceland” and why it is much better that way. But if there is something really wrong, however, you will find people very helpful and responsive, I think actually even more so than in most places and ready to go far beyond duty (but that is after the Icelander has determined that she/he agrees that there is an actual problem). Also, I don´t think anybody ever got the concept that a consumer at a restaurant or a coffee shop could ask for anything different from what is actually listed on the menu, as many people are used to doing in New York. I suspect that in a response to such a request you will be met with bewildered looks and confusion.

8. Finally, the most important political figure in Iceland, and most important person in Iceland in general – and this is very very important to remember – is the Mayor of Reykjavik. If you run into him, please bow, with left hand extended forward, and say loudly but clearly “Greetings from Gauti Eggertsson (pronounced Goyti Eggertsson)”.

Jón’s Guide to Fun in Reykjavik and beyond

1. Downtown Reykjavik in the daytime. In good weather, downtown Reykjavik can be a really nice place to spend an afternoon walking around. The main area is between Adalstraeti in the west and Frakkarstígur in the east. Some highpoints are:

Austurvollur : A small square across from Parlaiment. If the sun is out there are usually a

lot of people their enjoying a cup of coffee at the cafés around the park.

Hallgrímskirkja: Reykjavik‘s largest church. You can go to the top of the tower for a panoramic view of the city.

The pond: It is nice to walk around the pond when the sun is out and the weather is good. You can also stop at the National Art Museum which is along the pond on Frikirkjuvegur.

Laekjargata, Austurstaeti, Bankastraeti, Laugavegur and Skolavordustigur.

One good route would be to start at Austurvöllur and walk to Austurstræti and then along Austurstræti to the east and then up Bankastræti until you hit Skolavordustigur and then all the way up Skolavordustigur. At the top of Skolavordustigur is Hallgrimskirkja the largest church in Reykjavik. From there you could take Frakkarstigur north to Laugarvegur and then Laugavegur in either direction.

But then you could also walk around the northern part of the pond. And you could keep going south and take Skothúsvegur west to Tjarnargata and turn south and cross Hringbraut over to the campus of the University of Iceland. There on the corner of Hringbraut and Sudurgata is the National History Museum, which is one of the most interesting museums in Iceland. Very modern and interactive. Lots of Viking stuff.

Yet another good stroll is west along the harbor from Lækjargata. When you get to approximately Nordurstigur you will get to some old fishing huts that have been turned into an artist workshop center and also house a number of good restaurants. And a stones throw away from there is where the whale watching tours are.

In the evening, if the weather is good, it can be very nice to walk along the north shore. Start from the new music hall at the north end of Laekjargata and stroll east along the shore.

Another wonderful evening stroll in good weather is to take a taxi to Grotta, which is at the far west of the peninsula that Reykjavik is on and walk around the open area there.

2. Restaurants.

A site that lists a bunch of good restaurants and provides some information about them is www.visitreykjavik.is another good site that has recommendations is www.grapevine.is

Here are a few suggestions:

More expensive:

Fish Market (dinner), seafood. (Aðalstræti 12)

Fish Company (lunch/dinner), seafood. (Vesturgaga 2a)

Three Frenchmen (dinner), seafood/Icelandic specialties. (Baldursgata 18)

Kol (lunch/dinner), seafood/Icelandic specialties. (Skolavörðustig 40)

Sushi Samba (dinner), sushi. (Þingholtstræti 5)

Lobster House (lunch or dinner), seafood. (Amtmannstígur 1)

Less expensive:

Snaps (lunch or dinner), bistro (Þórsgata 1)

Nauthóll (lunch or dinner), Bistro. Nice view a little outside downtown. (Nauthólsvegur 16)

The Harbour (lunch/dinner), seafood/Icelandic specialties. (Geirsgata 7c)

Fish and Chips (lunch or dinner), healthy fish and chips. (Tryggvagata 8)

Gló (lunch or dinner), vegetarian. (Laugavegur 20b)

Smurstödin (lunch), open faced sandwitches. (Austurbakki 2 (in Harpa))

Hornið (lunch or dinner), pizza. (Hafnarstraeti 15)

Vegamót (lunch or dinner), Bistro/Bar. (Vegamótastígur 4)

3. Cafes/Bakeries/Hot Dogs.

Reykjavik has a very lively café culture. Here are a few places if you feel like sitting down for a cup of coffee in the afternoon:

Café Paris. Main attraction is its location on Austurvollur. Lots of outdoor seating when weather is good. (Austustaeti 14)

Kaffitár. (Bankastræti 8)

Reykjavík Roaster (Kárastíg 1)

Súfistinn. Upstairs in a big bookstore. (Laugavegur 18)

Icelandic bakeries are very good!! It is a must to go to a bakery. This is a really good choice for a light lunch. They have all sorts of sandwiches as well as pastries. A particular specialty is “Snúður” (pronounced “snoothur”). This is a large cinnamon bun with chocolate or caramel on top. It is much more bready and much less gooey than cinnamon buns in the U.S. I highly recommend these. Also, half a "Vinarbraud" (e. Vienna bread) a danish type pastry is very good but quite a bit sweeter than Snudur. There are bakeries all over the place. And their quality is pretty similar. So, any one is fine. But here are a few suggestions close to the city center:

Kornið Bakarí (Laekjargata 4)

Brauð & Co. (Frakkarstig 16)

Bernhöfts Bakarí (Bergstaðastræti 13)

Sandholt Bakarí (Laugavegur 36)

Björnsbakarí (Klapparstíg 3 (at Skúlagata))

Icelandic Hot Dogs are really good. You should definitely try one while you are in Iceland. You will probably have an opportunity to do this if you travel outside of Reykjavík and stop at a gas station/road side restaurant. Having a hot dog at the end of a night of partying is particularly recommended.

The standard condiments on an Icelandic hot dog are ketchup, sweet mustard, tartar sauce, fried onion and raw onions. If you order “eina með öllu” (one with everyting) this is what you get. But you can choose your condiments.

By far, the most famous hot dog stand in Reykjavík is Baejarins Besta (The City‘s Best), at the corner of Posthússtraeti and Tryggvagata. Visited by Bill Clinton among others. Voted the best hot dog stand in Europe in 2006 by The Guardian. If you are walking around downtown Reykjavik and want a small bite to eat, it is worth it!

4. Nightlife.

The first thing to know about nightlife in Reykjavik is that Icelanders party really late in the evening. On the weekend most of the places don't fill up for real until between 12 and 1am and then the fun goes on until about 3am or later. Some of the most popular places have very long lines after about 12:30 so a good strategy is to go to a good bar that you intend to spend some time in before or around 12 midnight.

All the best bars are in the old downtown area clustered on a few streets: Bankastraeti, Laugavegur (bottom part), Austurstraeti, Ingolfsstraeti and some side streets. Between 12 and 3am on Friday nights and Saturday nights Bankastraeti and the surrounding area should be full of people walking between different bars and cafes. Here are a few places that I think are popular and fun at the moment (these things change very fast in Reykjavík).

Relatively Low Key/Elegant:

1. Hotel 101 Reykjavik (Hverfisgata 10)

2. Marina (Myrargata 2)

3. Kolabrautin (Austurbakki 2 (in Harpa))

A bit more crowded and loud when the night progresses (but also quite civilized before midnight):

1. Kaffibarinn (Bergstaðastraeti 1)

2. Kex (Skulagata 28)

3. Ölstofan (Vegamótastígur 4)

4. B5 (Bankastaeti 5)

On a map you will notice that these places are all in walking distance from each other. In between there are lodes of other bars, some good and some bad.

5. Museums

There are a few museums that are worth recommending (if you are into that kind of thing):

National Museum: Very modern, very interactive, lots of Viking stuff. (Suðurgata 41)

Cultural House: Original manuscripts of the sagas. (Hverfisgata 15)

Reykjavík 871 +/- 2: Settlement exhibition (Aðalstræti 16)

National Gallery of Iceland: Paintings (Fríkirkjuvegur 7)

All these museums are pretty small. So, none takes very long to explore.

6. Transportation to and from the airport

Reykjavik Excursion operates buses between the airport and the main bus terminal in Reykjavik as well as to many of the main hotels. This is a good option for getting to and from the airport. You can take a taxi from the bus terminal in Reykjavik to your hotel if Reykjavik Excursion doesn‘t service your hotel. I use the Reykjavik Excursion bus whenever my parents don‘t pick me up at the airport. It is cheap and relatively fast.

Outside of Reykjavík

7. The Blue Lagoon (http://www.bluelagoon.com/) This is an awesome geothermal lagoon in the middle of a lava field between Reykjavik and the airport. I highly recommend that you take a dip in the Blue Lagoon. It is one of the most special places in Iceland.

Since it is on the way to and from the airport, one option is to go their either on your way into town when you arrive or on your way to the airport when you leave. One reason why this might be convenient is if your flight arrives early in the morning and you can’t check into your hotel room until noon. The Blue Lagoon has large lockers designed for luggage. The Blue Lagoon opens daily at 9am June to August, but 10am September to May.

Reykjavik Excursions operates busses that go to and from the Blue Lagoon and Reykjavik and the airport at convenient times vis-à-vis the flights to/from the U.S.: http://www.re.is/DayTours/BlueLagoon/ So, e.g., you can take the Reykjavik Excursions bus to the Blue Lagoon when you arrive. And then take their bus from the Blue Lagoon into town after you take a dip.

8. Other Places Outside Reykjavík

a. In the South-West: Thingvellir (the place of the old Parlament), Gullfoss (a waterfall) and Geysir (a geyser, actually the one that gives geysers their name). These three places together constitute the so called Golden Circle in tourist speak in Iceland. There are daily tours that take you to these three places.

b. Southern Highlands: A bit more off the beaten track are Thorsmork and Landmannalaugar. Both highly recommended. They both have mountain cabins and camp sites. But you could also drive in in the morning and come back in the evening (especially to Landmannalaugar. Going into Thorsmork and back in one day is a lot of driving.) On the way to Landmannalaugar (if you take 32 to F208) is Stong – a recreation of a Viking settlers dwelling – which is worth stopping at. Close by Stong is Gjain.

c. South: Hiking up from Skogarfoss is wonderfull. There is a series of waterfalls in the river that are really nice. After about three hours of hiking the terrain gets barren. You can turn around. Or you can do another 3-4 hours to the top. At the top is a newly formed volcano (the one that disrupted air traffic in Europe in 2010. There is also a superjeep service that offers tours to the top. You might even be able to negotiate with them to pick you up after you hike the first three hours. I did that once and it was wonderfull. Other places close by Skogar are Seljalandsfoss, Solheimajokull, Dyrholaey, and Reynisfjara. These are all pretty close by each other and can be done on the same day unless you spend a lot of time at Skogarfoss.

d. South-East: The Vatnajökull Glacier area is a spectacular area in good weather. The main sites are Skaftafell and Jokulsárlón (which is a Glacier lagoon that you can take a boat trip on). There are some really nice places to hike around Skaftafell and in April through June you can take guided hikes on the glacier (there are less of these later in the summer because of crevasses).

e. North-East: Myvatn, Dettifoss (the most powerful waterfall in Europe, quite a site. But make sure to see it from the western bank of the river), Ásbyrgi and the surrounding area.

f. West: Snaefellsjokull Glacier is the glacier that supposedly has the opening to hell (according to Jules Verne in Journey to the Center of the Earth). Spring is a really nice time to hike up this glacier. And there is a very nice hotel about 15 minutes away from the glacier (Hotel Budir) and another even closer that is cheaper but also nice (Hotel Hellnar).

These are the main places I can recommend. Some people rent a car and drive around the so-called ring road. This involves quite a bit of driving (1340 km). But you can hit almost all the spots by taking certain detours. Another plan would be to venture out of Reykjavik for a few days at a time. Perhaps stay at Budir for two nights and then come back to Reykjavik and then go somewhere in the south for a few days (perhaps Skaftafell)

9. Some Fun Activities for Outside Reykjavík

c. Hiking: Hiking is really great in Iceland in the summer. One great thing is that you are always “above the tree-line” since there are basically no trees in Iceland. Another great thing is that in the summer you can hike late into the evening or even overnight (at least in June and July). This is great because you get 10 hours of twilight.

Many companies offer hiking tours. Here are a few examples:

http://www.mountainguide.is/

http://www.adventures.is/Iceland/Hiking/

http://www.trek.is/en/home

b. Horseback Riding: Here is the website of the leading company that offers horseback riding tours:

http://www.ishestar.is/

c. River rafting. There are many rivers that have river rafting. One of the best places is: http://www.rafting.is/ I recommend the East Glacial River. That is a great ride. But there

are also other places.

10. Accommodations Outside of Reykjavík

Generally speaking, accommodations in Iceland tend to be clean and competent. So, I don't think you need to be afraid of choosing a 2 star accommodation if you want to conserve cash.

The Farm Holiday system offers a network of independently run relatively cheap accommodations outside of Reykjavík: http://www.farmholidays.is/ I have generally had a good experience with these.

11. Restaurants Outside of Reykjavik

a. South of Iceland

1. Fjorubordid at Stokkseyri. The langoustine is really great.

2. Lindin at Laugarvatn.

3. Rauda Husid at Eyrarbakki.