This is not technically a restaurant since there is no place to eat there but it's worth eating on the curb (like I saw one customer doing) if necessary. We ate here twice during our week on Kauai---and we stayed in Poipu not Lihue!
Full of locals and with a small parking lot, you may have to search this out (tho' it's on the main highway) but it's so worth it. Try the Spicy Ahi Tuna Bowl, the poke, or some of the best sashimi on the island. All at very reasonable prices, too.
The staff is very nice and welcoming whether you are a tourist or a kama'aina.