Melbourne isn't bursting with touristy must-sees but there's still excitement in exploring. For a fresh perspective on our megalopolis head to Panama Dining Room, where arched factory windows frame the city skyline, turning it into a grand and twinkly character in a sweeping, romantic tale.

A few years ago, the vibe here was "draughty share-house has a stab at dressing up". Now, the interior is chic and gleaming, from the fresh-lick-of-paint stairwell, to the shimmery feature wall and crystal cabinet, the deep, meaningful booths and groovy wallpaper. Much of the drama is in the sheer size of the place. A large lounge with pool table is among the city's best places for a sneaky gin and tonic. The dining room is subtly partitioned, superbly comfortable, sensitively lit and quiet enough to promote the art of conversation.

The menu is modern French: the classical repertoire underpins most dishes and some – a sweet onion soup topped with cheesy crouton, pork and pistachio terrine, apple tarte tatin – pluck straight from the canon. These bistro favourites are among the best eating here (though Smith Street's best onion soup is surely at Thomas Olive).

Elaborate menu descriptions raise expectations of other dishes and the kitchen doesn't always deliver. Chestnut gnocchi with pumpkin and parmesan puree, morel mushrooms, and slow-braised venison sounds like a wintry stunner. Sadly, the gnocchi is a gluey morass and the venison is braised into submission but adds little character. A drab broccoli and lentil side dish is not enlivened by being served in its cooking water. Much better is the pink and tender roasted lamb rump, served with a sticky jus and apposite carrot puree.

The apple tarte tatin is a simple and unembarrassed ode to indulgence, with gorgeous, sticky caramelised fruit, good flaky pastry and a generous scoop of ice-cream. Even with its foibles, Panama Dining Room isn't far from being really good. I will happily return to play tourist (or guide), and to have a drink, a bite and a big gulp of the view.

Rating: Three stars (out of five)