Sommarstängt is a compound word made up of sommar (summer) + stängt (closed). So it means "closed for summer", and you'll see it on signs in restaurants, cafes, shops, libraries, and other businesses starting roughly after Midsummer and continuing into about the first week of August.
It's used an adjective so it needs to agree with the noun, ending in -d for "en" words and -t for "ett" words. For example: skolan är sommarstängd, but biblioteket är sommarstängt.
Sweden's long summer holidays are written into law: most employers are legally obliged to allow their workers to take four consecutive weeks off in the summer, and naturally the majority of employees jump at the chance.
What's more, many parents might choose to combine those four weeks of vacation with their parental leave allowance so they have time off during their children's long summer holidays. Some large Swedish companies halt operations altogether over summer, and small business owners often decide to do the same.
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This all adds up to a strange feeling of emptiness in the bigger cities over the summer, as those who haven't gone abroad will often head to their rural summer houses. And the summer closures can be frustrating to those who aren't used to the system, especially since they coincide with the tourist season.
All the same, it's good to be aware of the custom so you don't get caught out when that restaurant or shop you really wanted to visit is closed for the rest of the month.
Example sentences:
Vi har sommarstängt v27-31. Välkommen åter i augusti!
We have closed for the summer between weeks 27-31. Welcome back in August!
Jag tänkte köpa bullar* till frukost imorse men bageriet har sommarstängt.
I was going to buy bread rolls/buns* for breakfast this morning but the bakery is closed for summer.
Note: In southern Sweden, you can use "bullar" to refer to bread rolls, while in the rest of Sweden "bullar" usually refers only to sweet breads like cinnamon buns, so you would use the word "frallor" instead if you wanted bread rolls.