Prawns for breakfast? The Fenwick is not afraid to throw out a few challenges in the early hours of the morning, including a dish of scrambled eggs and eggplant on french toast with baby spinach, and, yes, prawns. Blimey.

But challenge has been on the menu at this charming 1880s sandstone tugboat workshop for quite a while now, as local resident groups over the years have fought to save it and its precious piece of foreshore from development.

When the Inner West Council took it over, Bill Drakopoulos, whose Sydney Restaurant Group includes crack waterside restaurants such as Lumi, Ormeggio and Aqua Dining, began dreaming of a daytime licensed cafe. According to Drakopoulos, it was a process that took "17 years and millions of dollars".

Well, thanks for all your efforts, everyone, because it's quite the honey. Here you sit, a potato chip's throw from the water, right next to the East Balmain Ferry Terminal, with neck-bending views across Sydney Harbour that take in Barangaroo, Luna Park and the Sydney Harbour Bridge, and the comings and goings of ferries, showboats and private yachts.

The ground floor has been cleverly reworked into a wooden-decked, sandstone-walled dining room furnished with bentwood chairs, smart tables, and comfy leather banquettes.

At the back in a low-tech open kitchen, co-owner and executive chef Davide Rebeccato, and head chef Andrea Carassai calmly go about their business. The first floor doesn't gel quite as well, having not yet made up its mind if it's a dining room, art gallery (currently showing Nafisa Naomi) or storage room.

Lunches are Italianish and pitched to a mixed crowd of diners. One older couple with warming rugs over their knees starts with Sydney rock oysters with finger lime and white balsamic vinegar and a burrata with prosciutto, figs and vincotto, while a table of birthday celebrators starts with champagne and a cheese platter.

Rebeccato turns Italy's mozzarella in carrozza ($18) into a come-hither toasty; all crispness outside and melting, oozing, anchovy-spiked mozzarella inside that stretches into strings at every bite. It's a must.

What I thought might be a raw tartare of beef is actually a light, pretty salad of brined, smoked and sliced wagyu brisket, under a camouflage of slow-cooked egg yolk, rocket leaves and thinly shaved artichokes served on a rich, creamy artichoke puree ($26). No big flavour hit, but textures are smooth-on-smooth.

Firm little pumpkin gnocchi ($29) are riched-up big-time with a mushroom sauce and an overload of creamy scamorza (smoked mozzarella) foam, topped with scrawly shavings of truffle.

The pan-seared and roasted snapper tail ($35) is worth the wait, the meaty tail – in reality the whole fish without its head – beautifully cooked so the snowy white flesh cleaves from the spine. A satiny lemon garlic butter sauce mingles with a thatch of fennel fronds, parsley and sorrel.

Puds are popular, and an individual salted caramel tart with marzipan crumble, banana and coconut ice-cream and caramel popcorn ($16), while quite formal, is fine.

There's a tendency to over-sauce, particularly at breakfast – I think I'd stick to the simpler eggs on toast myself, at that hour.

But with its polite but classy casalinga cooking for breakfast and lunch every day, the Fenwick is a sweet spot, in a sweet spot.

The low-down

Vegetarian: Two vegetarian starters, one main course, three sides.

Drinks: Little Marionette coffee, Tippity teas, innovative cocktails, and a workable, balanced list of Australian, French and Italian wines by the glass, carafe or bottle sorted by Ben Cummings.

Go-to dish: Snapper tail with lemon and garlic butter sauce and mixed leaf salad, $35.

Pro tip: Check out what's showing in the first-floor art gallery.

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.