For good, inexpensive seafood meals, including Chilote dishes such as curanto, carapacho, and cancato, try La Pincoya, Av. Prat 61 (tel. 65/622613), which also offers views of fishermen at the pier engaging in hectic business from their colorful fishing skiffs. One restaurant popular with tourists and locals alike is Sacho (tel. 65/622260), which can be found inside the somewhat grungy market (Local 7). Across from the market is El Cangrejo, Dieciocho 155 (tel. 65/623091), which serves dishes such as crab carapacho in a kitschy ambience. Reservations at these establishments are neither necessary nor accepted.
"See Food" Everywhere: What to Eat on Chiloé
Part of the experience in Chiloé is sampling the local specialties of fish and shellfish dishes the Chilotes have invented over time. You'll commonly see dried and smoked mussels hanging in markets, but I haven't had the courage to try them yet. Another common sight (though common throughout Chile) is the cochayuyu, dried seaweed tied in bundles that Chileans use for stew. Chile's plentiful salmon farms are across the sound in the Andean fjords, and Chiloé has several oyster farms along its coast, so you'll see both items frequently on the menu.
Cancato -- Salmon stuffed with sausage, tomatoes, and cheese and steamed in tinfoil.
Carapacho -- A rich crab "casserole" with a breaded crust.
Curanto -- Perhaps the most famous dish here in Chiloé, traditionally prepared in a hole in the ground (similar to a New England clambake). First, hot rocks are placed in the hole and then layered with mussels, clams, beef, pork, chicken, sausage, and potatoes, and topped off with tasteless, chewy pancakes called milcaos. Most restaurants cook this dish in a pot and often call it pulmay; it is then served with a cup of broth. You are supposed to take a bite and then sip the broth; I recommend you just pour the broth over the meat and fish for a tastier meal.
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