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Away From Home Entrepreneurs in Iceland

How to Start a Restaurant Business in Iceland

A simple and practical guide for common people, immigrants, and first-time entrepreneurs, based on real restaurant business experience in Iceland.

Before you begin:
Starting a restaurant in a foreign country can feel confusing. You have to understand paperwork, rent, loans, food licenses, staffing, taxes, delivery platforms, equipment, and cashflow. This guide is written to make the process easier to understand.
Important:
This is not legal, tax, or financial advice. Rules, costs, taxes, and license requirements can change. Always confirm the latest information with official Icelandic authorities, your accountant, your bank, and your municipality.

🍽️ Who is this for?

People thinking about opening a restaurant, takeaway, café, food truck, or small food business in Iceland.

🇮🇸 Why Iceland is different

Iceland has a small market, high costs, strict food safety rules, seasonal tourism, and strong local customer habits.

💡 Main idea

Do not start only with passion. Start with planning, realistic numbers, simple systems, and patience.

1. Choose the Right Business Structure

Before spending big money, decide how you want to register the business. The structure affects taxes, responsibility, ownership, accounting, and future growth.

  • Individual registration: simple for testing a small idea.
  • Partnership: useful when more than one person owns the business.
  • Limited company: more structured and often better for long-term business.
  • A company receives its own Icelandic ID number, called a kennitala.
  • Professional accounting help is strongly recommended.
Tip: Choose the structure based on risk, future plans, and responsibility — not only registration cost.

2. Find the Right Premises

Location is important, but rent can also become one of your biggest pressures. A beautiful place with high rent can become dangerous if sales are slow.

  • Check rent, deposit, advance payment, and contract length.
  • Understand building fees, maintenance costs, and shared expenses.
  • Check if the space is approved or suitable for food operations.
  • Look at ventilation, drainage, electricity, storage, toilets, and kitchen layout.
  • Think about parking, delivery pickup, foot traffic, and visibility.
Ask yourself: Can this business survive if the first 3–6 months are slower than expected?

3. Plan Financing and Cashflow

A restaurant can look busy but still struggle financially. Cashflow is one of the biggest survival points.

  • Prepare a realistic business plan.
  • Prepare future cashflow projections.
  • Include rent, salaries, raw materials, electricity, insurance, accounting, and loan payments.
  • Do not forget packaging, delivery commissions, repairs, and marketing.
  • If buying property, banks may request property evaluation and insurance details.
Simple rule: Profit on paper is not enough. You need cash in the bank to pay bills on time.

4. Understand Taxes, VAT, and Accounting

This is one area where many new business owners get surprised. In Iceland, accounting, payroll, VAT, and tax deadlines must be handled properly.

  • Get an accountant early, not after problems start.
  • Understand VAT registration and VAT payment cycles.
  • Keep invoices, receipts, salary records, and supplier bills organised.
  • Understand payroll costs before hiring staff.
  • Ask your accountant what reports and deadlines apply to your business.
Important: Cheap accounting can become expensive later if mistakes are made.

5. Apply for Food License and Health Requirements

Food safety rules are serious. A restaurant needs systems, not just good recipes.

  • Temperature records for fridges and freezers.
  • Cleaning schedule and cleaning procedures.
  • Oil change procedures.
  • Allergy list for food items.
  • Chemical list and storage safety.
  • Pest control plan.
  • Food storage labels and proper organisation.
  • Chimney and ventilation cleaning procedures.
  • Website or menu information where needed.
Note: Alcohol, cigarettes, or other controlled products may need separate licenses.

6. Buy Equipment Carefully

Many new restaurant owners overspend on equipment in the beginning. Excitement can create unnecessary costs and reduce kitchen space.

  • Buy only what you truly need for your opening menu.
  • Measure your kitchen space before ordering equipment.
  • Check electricity and ventilation requirements.
  • Think about workflow between cooking, packing, cleaning, and storage.
  • Leave space for staff to move safely.
Remember: Space is money in a restaurant. Do not fill it with equipment you rarely use.

7. Study the Market and Build Your Brand

Before opening, study your market properly. Good food matters, but customers also care about price, location, convenience, reviews, photos, and trust.

  • Visit similar restaurants and understand what they offer.
  • Check pricing, portions, menu style, opening hours, and customer reviews.
  • Create a Google Business Profile.
  • Build a simple website with menu, address, opening hours, and ordering options.
  • Use social media consistently, but do not depend only on social media.
  • Invest carefully in signage, menus, packaging, and photos.
Ask before spending: Will this help customers find us, trust us, or order from us?

8. Plan Staffing and Daily Operations

Staffing is one of the biggest challenges in Iceland. A restaurant needs reliable people, proper training, and backup plans.

  • Understand salary costs before hiring.
  • Plan shifts based on real sales, not hope.
  • Train staff in food safety, customer service, and cleaning routines.
  • Prepare backup plans for sickness, holidays, and busy days.
  • Create simple checklists for opening, closing, cleaning, and stock control.
Real talk: If the business depends only on one person, that person will eventually burn out.

9. Understand Delivery Apps, Seasons, and Stress

Modern restaurant business in Iceland is affected by delivery platforms, weather, tourism, winter darkness, and customer habits.

  • Delivery apps can bring orders, but commissions reduce margin.
  • Direct website orders can help protect profit.
  • Packaging quality matters a lot for takeaway and delivery.
  • Winter, storms, and dark months can affect sales and staff movement.
  • Tourism seasons can change demand depending on your location.
  • Restaurant work can become mentally and physically exhausting.
Important: Do not overexpand too fast. A bigger restaurant, bigger menu, or second location can increase stress if systems are not ready.

10. Keep It Simple and Build Systems

When you start, many ideas will come at once. But doing too much too early can damage the business.

  • Start with a focused menu.
  • Keep operations manageable.
  • Track daily sales and costs.
  • Control waste and stock.
  • Create repeatable systems.
  • Improve slowly instead of changing everything every week.
KISS: Keep It Super Simple. A simple business that runs well is better than a complicated business that breaks every week.

Final Thought

Starting a restaurant business in Iceland is possible, but it needs preparation, patience, realistic money planning, and strong daily systems.

This page is part of Away From Home Entrepreneurs in Iceland — created to share practical experience for people building something new away from home.

Start small, learn the system, protect your cashflow, and do not be afraid to ask for help.