On the road down to the Post Office upstairs from the "cinema" is this 2 storey restaurant with friendly service and a great vibe.
In my time in Mcleod, it was our main hangout as we had jam sessions in the rooftop cushion chill out area and drank beer until they chucked us out. This being India, they aren't open that late but then the mostly Nepali staff are quite flexible, so you will probably find yourself walking the empty streets of Mcleod Ganj on the way home.
The food when I was here was kind of average to be honest. The Thali pictured below was alright but without the strong spice you really want from Indian dishes. Their foreign food was a bit better, with decent pizzas (although not the best in town). I recommend their fruit custard and rice pudding as late night beer sops to warm in the cold nights of the mountains here.
They do water refills to save both you money and the environment the extra plastic bottles which are restricted in this area.
If you can get a few folk with guitars to come down and start a singalong this is definitely a favourite location.