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Taormina has many, many places to eat. From casual cafes to posh top end restaurants, you'll have plenty of choices.
The place to start is the Corso Umberto, which is lined with restaurants, bars and gelaterias. At the cheaper end of the scale you will find Rosticcerias - basically hot food takeaways selling pizza by the slice, arancini (riceballs with either cheese or ragu sauce). Pizza comes in just under 2euro per slice (and a slice is a meal in itself) and is normally very tasty hot or cold. The best in Taormina is the Panificio Notturno, just down the steps at the back of Piazza Duomo. Food is very good and cheap and you get a lot of locals in at lunchtime and dinner time.
The next step up is bars, cafes and gelaterias. There are dozens along the Corso Umberto, all selling much the same selection of ice cream confections, bruschette, panini and drinks. Ice cream is good everywhere, and the famous brioche con gelato is a must -especially with chocolate ice cream. However hot food can be patchy and it's well worth sneaking a look at the plates of other diners before ordering. At the Porta Messina end of town, the Shaker Bar is a good place to stop and soak up the sound of locals gossiping whilst enjoying an espresso or two. Further up, at the end of the Naumachie Roman wall, you'll find the Arco Rosso, perfect for people watching whilst sipping a glass of local wine. If you're peckish, the Bruschetta is very good here too.
There are also a wide range of restaurants, pizzerias, trattatorias etc where you'll get a pasta and pizza, along with meat and fish dishes. Pizzas and pasta dishes are generally very good and you'll be hard pushed to spend more than about 10 euro. Seafood is a speciality in many and tends to be a bit more expensive, although good quality. Most will offer plenty of choices of wine, from local Etna Rosso or Nero D'Avola at around 10 euro per litre to wines costing 100 euro or more a bottle. It is worth pushing the boat out and trying a more expensive wine once in a while since there are some very good vineyards in Sicily. If you are a wine enthusiast, try the Osteria Nero D'Avola at the Porta Catania end of town - the staff are very knowledgeable and friendly, and many wines are available by the glass. 'The Solaris' which overlooks the 'Roman theatre' is a great place for a lunch or snack serving great home made pasta's & pizza. Just outside the porta Cantania is the 'Tiamasu' resturant, very popular serving wonderful food, it is often advisable to book as it is very popular. For pizza, the recently opened Bistro 60/67 at the Porta Messina end of town is very good and very cheap and also has an extensive wine list. For gourmets, Ristorante Naumachie is a must. Located along the Roman Wall, this restaurant is part of the slow food movement. It isn't the cheapest place in town but the food is fantastic and they have a range of wonderful balsamic vinegars to taste. However it is worth experimenting - it is very difficult to have a bad meal in Taormina!
Final mention should be made of the fruttiverdure guys who are around the town in the morning in little trucks loaded with fresh seasonal fruit and veg. This is where local people do their daily shopping and are the freshest and best fruit and vegetables you'll ever taste! Some will still have the dust from Etna on them if you look closely. Most of the guys who run them don't speak any english but are very good and helpful at communicating in sign language. Expect to pay around 2 euro per kilo for pretty much anything on the truck. The only words you really need are 'un kilo di questi' whilst pointing at what you want.
Expect to come back with a little bit of Taormina around your waistline!