For a tourist town, the restaurants in Cuzco are priced fairly decently. The most expensive restaurants and not always the most authentic ones are located near the main square. These restaurants will usually have aggressive sales people standing outside holding menus and yelling at you to come into their restaurant. They will often entice you into their restaurants with a “free drink card” usually for a free Picso Sour. Be aware of some of these restaurants, sometimes they do not give you the drinks. Two of the restaurants on the square that I visited offered free drinks and then refused to give them to me when I entered their restaurant.
There are many small restaurants away from the square, some very local – and you will not find any tourists in them. These are the cheapest types of restaurants. The further you walk from the main square the trend seems to be towards cheaper restaurants. Often you can get a dinner for 1-3 US dollars. One restaurant merely a few blocks from the Plaza del Armas served only to locals – no tourists were eating there. They served two dishes, either soup or a rice and vegetable dish. Portions were large and each dinner was only 1.5 soles! There are quite a few restaurants like this in Cuzco, you just have to do some exploring.
There are also street side vendors – most commonly selling meat on a stick that is bbq’d in front of you. Usually a variety of sauces for dipping the meat into are available. These are quite tasty and make a very cheap meal. Make sure you watch them cook the meat and be sure that it is well cooked.
Breakfast at a cheap local restaurant will run you about a dollar or two. This usually consists of an egg or two cooked how you like, toast, butter and jam (extra jam may cost you additional), and a fresh squeezed drink, usually orange or papaya juice.
Trout ceviche (raw fished marinated in lemon juice) seems to be a popular dish in Cuzco. Cuy roasted Guinea pig is another local favorite. The several Cuy I consumed were mostly bone and not much meat – however its worth trying this dish at least once if nothing other than to say you’ve eaten roasted Guinea Pig!