Machu Picchu (Calle Eusebio A. Morales, tel. 264-9308, noon–3 P.M. and 6–11 P.M. Mon.–Sat., noon–9 P.M. Sun.) is a pleasant, cozy, and moderately priced Peruvian restaurant with friendly service and decent seafood, which is its specialty. A good value here is to share a number of appetizers, which average around US$5. Try the Peruvian ceviche, which is prepared quite differently from Panamanian ceviche.
The house wine is good, but consider sampling a pisco sour if you’ve never had one and are willing to risk a drink made with raw egg. Machu Picchu has a sister restaurant of the same name in Boquete [1]. Interestingly, the food is actually better in Boquete.
Links:
[1] http://www.moon.com/destinations/panama/western-highlands/boquete/food/restaurants