Is there any Melbourne establishment as wreathed in mystery as the Colonial Tramcar Restaurant? A glorious maroon fixture trimmed in Hollywood lights, it's the meals on wheels phenomenon flocked to by tourists but which has remained a source of untouched curiosity to locals since hitting the tracks in 1983.

But what exactly happens beyond the tassled veil?

We're among a few locals gathered at the tram stop on Normanby Road. It's a nervous-looking gang of voucher-touting French and a huge group from Malaysia, all with smartphones at the ready.

On board, every inch is covered in red velvet and retro lamps. Laid out is our amuse consisting of crackers and two rosettes of dip – sun-dried tomato and hummus tinged with mint. A cork pops, the tram judders and to the tune of Ella Fitzgerald, we're away.

The menu seems barely to have changed since the '80s when entrees included "avocado Nellie Melba". The food, impressively, comes from a kitchen the size of a Rex flight galley. Sure, it's as retro as an outback wedding reception, but at worst it's robustly consumable and at best, it's actually Pretty Good.

We choose between charcuterie (nice rillettes, cornichons and pate with cold toasts) and a two-tone tower of chopped smoked salmon and avocado cream cheese ringed by a gazpacho moat. Is it a vision from a 1997 women's weekly? Absolutely. What a thrill.

This is the retro dinner party you only wish your friends were brave enough to throw, trimmed with more velvet than should be allowed and featuring a drinks service fit for a '70s airline. Your $135 five-course dinner (there's also $90 lunch and shorter pre-theatre trips) includes literally as much Ninth Estate sparkling, basic wines and non-brand-specific spirits as they can get in your glass while cornering Albert Park.

Is the scenery spectacular? Back in the '80s the tram was free to roam. These days it's mostly the 12 route to St Kilda and a closing city loop. Still, as we hit Acland Street and mains (a good steak, served rosy and buttered with a creamy potato gratin is better than the vaguely Asian chicken breast and mushrooms) Luna Park glows bright over dinner. For a glorious moment, the lifeblood of Melbourne courses through our veins. That, and shiraz.

The steak, cream cheese and never-ending wine hits as we reverse up Acland Street. We suddenly understand why, between the brie and fruit and our chocolate orange tart dessert, there is a pause in Albert Park.

"A woman cried and fell asleep last week," confides our waiter. Sometimes there's bonhomie between tables. Occasionally the confined space, Tia Maria and language barriers do exactly what you expect. Once, someone also sabotaged the toilet after a lover's tiff. But this crew is ride or die, all winking jokes and bomb-proof stoicism in the face of sullen teens and upchucking tourists. Joe, who rides the other carriage, is known to sing.

Is this the best experience in Melbourne? I'm not sure. But if you can get on board with the glitzy, kitschy glory of cheese and crackers and steak and shiraz in a vintage tube outfitted like a tea parlour in a French knicker shop, you're in for a magic compartment ride.

Est: 1983

Famous diners: The Harlem Globetrotters; Dannii Minogue had her 40th birthday aboard.

Prices: Four-course lunch $90; early three-course dinner $85; late five-course dinner $130 (Sun-Thu); late five-course dinner $145 (Fri-Sat).