We have previously covered why there is no Starbucks in Iceland, but now we are going to have the first two branches opening soon in downtown Reykjavík. The operation is managed by a subsidiary of the Malaysian company Berjaya Food International. The first café will be located on Laugavegur, the main shopping street. The company operates in around 80 countries with over 40,000 branches worldwide.

The brand is well known to Icelanders from abroad and has been available in local grocery stores for some years. Berjaya made an agreement with Starbucks in August last year to run cafés in Denmark, Finland and Iceland. 

Although Starbucks has not been present until now, there has been significant competition and variety in the local coffee market, as Icelanders are known for their love of good coffee. In fact, Starbucks will be the first international coffee chain to open branches in Iceland, although Costa coffee has been sold at some local cafés since 2023.

Mixed Results for International Restaurant Chains in Iceland

International restaurant chains have attempted to establish themselves in Iceland with mixed results. The most successful ones have been Subway, Domino’s and KFC while McDonalds, Burger King and Dunkin’ Donuts have closed down after shorter and longer stays. 

McDonald’s opened in Iceland in 1993 but shut down all operations in 2009 after the collapse of the Icelandic króna (currency exchange rate) in the financial crisis made it unprofitable for them to run a business here. Burger King lasted for some years after opening and Dunkin’ Donuts even shorter. It generated a hype when it opened downtown Reykjavík initially in 2015 but that fizzled out quickly and they closed their downtown branch only two years later and all operations in Iceland in 2019.

On the other hand, Domino’s has been the most popular fast food chain in Iceland for years, closely followed by Subway. KFC is also widely popular with many branches.

• See also: The Most Popular Fast Food in Iceland

As mentioned in the beginning, the local coffee market is competitive and below, we cover some of the best cafés in Reykjavík.

The Best Coffee Shops in Reykjavík

There is a wide variety of great coffee shops in Reykjavík, and below you can see some of the most popular ones.

• See also: The Best Coffee in Iceland

Café Loki

A café and restaurant with Icelandic home style food, best known for its traditional lamb meat soup (íslensk kjötsúpa). With coffee, you could have a classic pancake, rye bread ice cream or skyr cake.

The Cat Café

Reykjavík is known for its many cats and the cat café opened in 2018, following a tradition of such cafés that started in Taiwan in 1998. 

Café Babalú

One of the most popular coffee shops downtown Reykjavík, known for its decor and veranda where people can sit outside in the summertime.

The Laundromat Café

Founded in Copenhagen by four Icelanders in 2004, Laundromat opened its first branch in Reykjavík in 2011. Family friendly with a children’s area and washing machines where guests can drink coffee while waiting for their laundry.

Café Rosenberg

Here you can get specialty coffee from trained baristas, a selection of beer on tap, home made cakes, toasted bagels and more. 

Prikið

Prikið is among the oldest cafés and bars in Reykjavík, opening in 1951, and the interior is heavy wood, dark colors, old classic style. They serve breakfast and brunch alongside great coffee and often have live music in the evening. 

Mokka

Another one of the oldest coffee shops, Mokka on Skólavörðustígur (“Rainbow Street”) opened in 1958. The style inside is also old and classic but this is only a café, not a bar as well.

Kaffi Laugalækur

Kaffi Laugalækur is the only coffee shop on this list for Reykjavík that is not downtown (where most of the city’s cafés are located). It is a neighborhood café that serves brunch on weekends and breakfast every day. It has a low profile and is something of a hidden gem, located in the same neighborhood as the biggest swimming pool in Reykjavík, Laugardalslaug. For food, try e.g. the vegan sandwich or the pizza called Frú Lauga. Kaffi Laugalækur is also a hostel.

Kaffivagninn

The oldest café/restaurant in Iceland (est. 1935), located in an old house by the harbor in Grandi. You can get a fish soup, fish and chips among other things but also “The fish hater’s burger” if you dislike fish. It is closed for renovations when this is written but should open again in early May.

Will Starbucks thrive in Iceland like Domino’s or be short-lived like Dunkin’ Donuts? Only time will tell.