Many guests dine at their hotels, and the major ones listed (Casa Andina, Libertador, and Sonesta) all have very good restaurants. Perhaps better for drop-ins is the fine restaurant of Hotel Sol y Luna. Its Killa Wasi is a lovely two-story space with an open fireplace and pub on the second floor. The restaurant is open to nonguests, and it serves very nicely prepared criollo and Nouveau Andean specialties, including ají de gallina and stuffed river trout, as well as fresh pastas. Call for reservations because the restaurant is often full with hotel guests.
Several restaurants are scattered about the main valley highway. A favorite of groups that storm through the Sacred Valley three times a week on market day is Tunupa, Km 77 Carretera Pisaq-Ollantaytambo (on the left side of the road on the way to Ollanta; tel. 084/963-0206), owned by the same folks who own the restaurant of the same name in Cusco. In a massive, purpose-built hacienda with long corridors that form dining halls overlooking the Urubamba River, it's something akin to a Peruvian bierhall. It must seat at least 300 diners, and it's all buffet, all the time. Even though it can get crowded on market days at lunchtime, it's a fair value for an all-you-can-eat buffet for $14, including a pisco sour. Even better is Alhambra, Carretera Urubamba-Ollantaytambo s/n (near Hotel Sol y Luna; tel. 084/201-200), also a hacienda-style restaurant targeting bus tours, but in a more relaxed and intimate manner. The dining rooms are smaller, and there are tables outdoors under a thatched roof, with lovely garden and mountain views. Its buffets are only on market days (Tues, Thurs, and Sat). At other times, the three-course menú turístico ($10) is excellent; choose main courses such as stuffed lake trout with quinoa in a nut sauce.
On the main road going toward Yucay, Quinta Los Geranios, Av. Cabo Conchatupa s/n (tel. 084/201-093), is a pretty good open-air restaurant set around a garden. It gets hit midday with tour buses but still manages to concoct fine versions of Peruvian standards such as rocoto relleno (stuffed hot peppers) and a number of indigenous soups. The three-course lunch menú is a good value. A similar tourist-group restaurant across the street is El Maizal, Av. Cabo Conchatupa s/n (tel. 084/201-054); it offers a buffet lunch and has both indoor and outdoor seating.
In Urubamba itself, La Casa de la Abuela, Bolívar 272 (tel. 084/622-975), a charming and sprawling house a couple of blocks from the Plaza de Armas, used to be one of my favorite places to eat in the region. After a couple of years of spotty activity, due to the owner's illness, the restaurant is again operating at more or less full speed, if without the enthusiasm of past years. It specializes in pizzas from a wood-burning oven, pastas, and tasty home-cooked Peruvian dishes. The restaurant has terra-cotta walls, several dining rooms, and an inviting living room/bar area. It looks and feels like someone's house -- in fact, it is the house of the friendly owner's great-grandmother. The Muse Too, Plaza de Armas (at the corner of Comercio and Grau; tel. 084/201-280), a sister establishment of the San Blas bar The Muse in Cusco, is a low-key two-story pub/restaurant with a single corner balcony upstairs. It features pretty decent soups and sandwiches. At night, it operates more as a bar than restaurant.
Chicha Here, Get Your Warm Chicha -- Throughout the valley, you'll see modest homes marked by long poles topped by red flags (or red balloons). These chicha flags indicate that home-brewed fermented maize beer, or chicha, is for sale inside. What you'll usually find is a small, barren room with a handful of locals quietly drinking huge tumblers of pale yellow liquid. Tepid chicha, which costs next to nothing, is definitely an acquired taste.