The Blue Parrot is kind of the locals bar in Sandy Bay. It's not on the beach, and in fact it is on the main road, but it's set off the road just enough that you don't really notice the cars going by. It's really more of a pub / bar and grill than a straight up restaurant, and many of the local ex-pats hang out here. The people are pretty friendly and welcoming, and it's a great place to get the "inside scoop" on the island. They've got a small staff, so if you're in a hurry, you probably shouldn't visit Roatan, er, I mean you might do better to choose somewhere else until you have a little more time.
The menu is a blend of Jamaican, Asian, American, and Seafood. We had dinner here a couple of nights and while nothing we had to eat stood out as particularly outstanding in terms of food, the meals were solid and the drinks are excellent (they definitely don't water them down nor skimp on size!). Of the food items, my recommendation is the coconut battered shrimp, which were cooked very nicely. If you are interested in trying a monkey lala (the Roatan signature drink), Carol makes one of, if not the best, on the island.