Some restaurants worth checking out:
[FONT=@Arial Unicode MS][FONT=@Arial Unicode MS]La Broche: best to make reservations. It is at the Hotel Miguel Angel.
Jose Luis: great tapas! very traditional food and i think it is part of a chain but not too sure on that.
Santeceloni: This is one of my fave places. For me, it is one of madrid's best restaurants. It is great for dinner or lunch but I'd recommend it for dinner just because there is always a little something extra special in the atmosphere at that time.
Sobrino de Botin: It doesn't look like much on the outside but like the oldest restaurant in the world or something. I personally do not go here much, just been once to check it out. Food wasn't that great imo, but this is one of those places you visit just to say you've been since it is so old, etc. It is more for the atmosphere than the food really but even then it is mainly one of those touristy places these days.
El Chaflan: it is in a hotel too. nuveau cousine, so not very traditional but good nonetheless. really like the fried white asparagus and mushroom risotto and caramel dessert.
Jockey: not spanish, but more of an international cusine. It is a nice restaurant though and I recommend it for lunch.
El Amparo: It is a nice romantic place to go for lunch or dinner. Good spanish food.
Cafe de Oriente: go for the views! The second floor offers nice views of the park and palace. Food is really hit or miss imo though. Once, I went and it was great, another time i went and it was okay, it wasn't that bad but just seemed different than the first time and it was a bit cold. Still worth going though.
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La Bocaito: It is in Chueca neighborhood. I would go here during the day for lunch but at night it can get busy and it is a bit off the beaten path. Good place for tapas.
El Brilliante: Nice and casual bar/restaurant. It's usually really busy at lunch time but it is a nice place to grab some food when you aren't in the mood for something quiet and more elegant. The tapas menus is really good too.
Casa Libre: Really good tapas as well. I usually just get something to eat and leave, so I can't comment on the sit in experience. It is close to a ton of shops (preciados street).
Gabbana 1800: Great bar to just people watch. Most local celebs hang out here. It is on Velazquez street and the drinks are great! I could spend hours on end here lol.
Cholcolateria San Gines: A nice place to grab some warm (and so delicious!) churros and chocolate!
La Paz: nice market in Salamanca district. They sell amazing tapas, good cheeses, oils, fruit and stuff. My house is nearby so I shop there a lot but if you aren't nearby, it may not seem to be worth it unless you are shopping in the area then it is worth stopping by to pick something up.
LaVinia: it is a must if you like wine. It is a wine shop with a huge selection and also a good place to get some lunch.
Mallorca: delicatessan in Salamanca district. One of my favorite places to just grab something fro a quick lunch when I don't feel like eating out. They have a lunch menu too and a lot of pasteries, sweets, etc.(they are all sooo good!) It is close to the Retiro park so if you are going there you can pick up a picnic basket from here. The food is very good.