Eating in a restaurant in Iceland is much more expensive than in the US or mainland Europe, and Icelanders tend to eat out less often. So what can you do if you are travelling on a tight budget?

Foreign fast food chains are the first thing to cross off your list if you are trying to save money. Did you fly all that way to eat the same processed carp that you can get at home?

For a traditional Icelander, fast food is from a gas station or kiosk - hot dogs or a pre-packaged shrimp salad sandwich, along with a Coke or malt extract. Most gas stations also sell dried fish (harðfiskur) which many nibble on as they drive (the steinnbítur type is softer and especially delicious).

Another move for the budget concious is to visit a grocery store for a loaf of bread, some cheese, canned fish, and a tomato or cucumber. While grocery stores carry the basic loaves of bread, bakeries are the place to go for fancier cereal fare. Bakeries can be found even in relatively small towns, and they also have dairy products and juice.

Restaurants in the smaller towns around the country are quite variable - some are quite basic, while others have very good food. Ask around, check the menu, stick your head in, and take a chance.

I came across a group of broke Scottish students that were spending the summer in Iceland a few years back, and they brought almost all their food with them. It was mostly dried camping stuff in packages, and they got sick of it fairly soon.