They say that Kings Cross is dead. But from where I'm sitting, at the bar of a new Mexican restaurant on the eve of Mexico's famous Day of the Dead, there's plenty of life in the old girl yet.

Chula is the baby of Peter Lew and Nicole Galloway (Fei Jai, Barrio Cellar, and the late Barrio Chino), who have fallen heavily for this bold, bright cuisine and culture.

There's a lot of spirit in here – and I'm not talking about the shrine to tequila high on the wall, whose sole reliquary is a pair of beaten-up cowboy boots. I'm talking about a mad mix of mezcal bar and Mexican grandmother's kitchen swirling around a central cocktail bar encircled by split-level, inside/outside dining and high and low seating and black wicker lampshades overhead.

Designer Joshua Clapp of Steel and Stitch has released his inner abuela with earthy terracotta tones, faded photographs of Mexican scenes, vintage cupboards, linen fabrics, agave plants and religious motifs.

Chef Alvaro Valenzuela from Mexico City, brings a strong regional spin to the menu, with lots of charcoal cooking and addictive Oaxacan street food. No burritos, mind, and no fajitas.

Instead, seafood features in cocktail tostadas ($12), which are big enough to share, but as our barman says: "Don't. Too messy". The crisp tostada base is topped with a chip-chop of cold prawn, squid and okky, with a super-clean, sharply acidic dressing that pulls it all together like ceviche on toast.

So much of this food is bright, fresh, sharp and bright green – like an aguachile (Mexican ceviche) of chunky fresh raw snapper ($19) freshly marinated in jalapeno, lime juice, cucumber and red onion.

Tlayuda ($20) is like a plate-sized tortilla crispbread topped with black bean puree, a savoury crumble of LP's Quality Meats' sweet, mild chorizo, and random attacks of melted Oaxacan cheese, striped with a pea-green jalapeno emulsion.

Pollo al carbon ($28) comes straight from the grill, jointed and suitably blackened; the meat almost fruity and the skin softened by the guajillo chilli salsa marinade.

Bar service is full-on, fast, well-mannered and cluey. You can speak mezcal with Reece Griffiths and drill right down to the pueblo, the agave, and the mezcalero. Cocktails are heady but balanced, and include a Nopal ($18) of Sotol agave spirit, damiana herbal liqueur, prickly pear, chickpea water and IPA beer that's like a grown-up shandy.

Wines are chosen for their ability to stand up to spice, heat and acid, like the 2015 Eidoselas "Charquino" albarino ($13/$62).

Valenzuela keeps everything so clean, lean, green and herbal that if you weren't thinking straight – and that's entirely understandable – you would swear the food was almost healthy.

Until you hit the churro sandwich ($14), that is. Two crisp, flaky spirals of piped and deep-fried churros dough hold a ball of creamy salted caramel ice-cream, topped with a caramelly cajeta syrup in a thrill-a-minute ride.

It feels good to be in Kings Cross on a Friday night surrounded by happy people who are getting stuck into food as well as booze.

Clearly, Peter Lew and Nicole Galloway believe in the Cross; they get off on the mix of people and occasional madness, and so force it to evolve. Time to stop mourning the death of the old Cross, and start celebrating the life of the new one.

The lowdown

Pro tip You can turn your icy cold beer into a Michelada (with lime, chilli salsa and clamato) for an extra $2

Go-to dish LP's chorizo tlayuda ($20)

Vegetarian Good meat-free options on tacos, empanadas, tlayudas and ensaladas

Drinks Fresh, agave-based 'cocteles', agua frescas and sodas, and 22 wines by the glass

Terry Durack is chief restaurant critic for The Sydney Morning Herald and senior reviewer for the Good Food Guide. This rating is based on the Good Food Guide scoring system.