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Austin is a casual town, with a lot of family-friendly dining options. Most restaurants offer a fair selection of vegetarian items.
EZ's on Lamar at 39th specializes in kid-friendly fare & shakes, that adults will find appealing as well. Very good pizza! Superb quality overall. Call about possible Wed. specials.
The food trailer scene is vibrant, check out the trailer locations on S. Congress & S. First because they offer multiple dining options to please even the most finicky eater (and you can bring in beer if you wish). Might Cone & Torchy's Tacos offer outstanding food.
Hut's Hamburgers at 807 West 6th is classic Austin atmosphere with 2 for 1 burgers on Wednesdays.
Shady Grove on Barton Springs and Galaxy Cafe (mult locations) offer a diverse menu with great chicken fingers.
Whole Foods (5th & Lamar) & Central Market (40th & Lamar) flagship stores are a destination unto themselves & offer tasty eat-in or to-go options with significant vegetarian options (be prepared to eat at outside tables, they get crowded). Quality is good, but prices are not cheap.
Milto's Greek & pizza on Guadelupe is a real bargain, kind of a dump, but the food is terrific.
Delicious Tex-Mex, cool atmosphere & margaritas abound: Maudie's, Chuy's, Vivo's (abstract naked lady paintings, some of the best tortilla soup in town), Santa Rita Cantina, Guero's Taco Bar. Also reliable favorites: Matt's El Rancho, Serrano's, El Azteca (east side oldie), El Arroyo. Free-Birds & Chipotle for burritos. New cool spot TnT - Taco's N Tequila offers a lot of a-la-carte options suitable for children, but avoid hipster crowds Thurs - Sat nights.
Other good eats if your kids are a little more adventurous: Wahoo Fish Tacos (5th & Rio Grande), Pei-Wei or Suzie's Chinese.
Not super-cheap, but top quality: Home Slice Pizza (it gets crowded), Brick Oven Italian (Tues wine specials).
A good site for reliable Austin food info: www.austin.citysearch.com
To get coupons for Austin restaurants, sign up for Groupon, and check out Restaurant.com - they regularly send out 70-80% off specials. Note you have to buy the coupons, but they are a good deal, just be sure to read the fine print.