Cafe Arhus is pretty much the only show in town, so if you are staying in Hellai you won't have much choice about where you eat. We ate there for several nights in a row as our tour group was in Hella for the week (which I would not recommend).
That being said, the food is actually decent. The more traditionally Icelandic dishes (e.g. fish) are generally much better than the more "American" ones (e.g. burgers). Prices are really too high for a small town restaurant. The portions could also stand to be bigger.
Service ran the gamut from attentive to rude depending on how busy the dining room was and who was serving your table. Our servers were generally very nice, but a couple of our travel companions were basically yelled at in front of the entire dining room for asking when their food would be ready.
If you're going to be eating in Hella, you might as well eat here because the alternative (Kanslarinn) is much, much worse.
This review is the subjective opinion of a TripAdvisor member and not of TripAdvisor LLC.