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There is an abundance of nice bars and restaurants in and around the old town.

Olde Hansa    
First up there is Olde Hansa. This is a little more expensive than the average Estonian restaurant, but it is worth every penny. Set up as a traditional medieval tavern, the staff are in traditional dress, even the goblets and wooden bowls are in keeping with the character. The food is great and again quite unusual. It is easy to find too. You enter the old town via the main entrance, along Viru street (Between two large turrets), it eventually opens out into a small square. It even has Olde Hansa on the side of the building in large Iron letters. Oh and I'd also recommend trying the cinnamon roasted almonds from the stand on the corner just outside.

    African Kitchen
Another great themed restaurant and a rather unique place called the African Kitchen. This is situated at the corner of Uus and Aia street. As the name suggests, it is an African themed bar/restaurant. The mud effect walls are lined with tribal masks, and the seats are decked with tiger and zebra patterned cushions. They do interesting dishes you won't find elsewhere in Tallinn, the African style curries are rather tasty. They also do an assortment of cocktails named after each of the countries in Africa. Well worth a visit.

The next place I'd recommend is the Kompressor. From the old town square take Dunkri street and turn right onto Rataskaevu. It will then be on your right (Look out for the orange door). This place is often overlooked, which is good as the prices are cheap. They are renown for their pancakes, both sweet and savoury. But beware they only take cash.

VS Bar    
As far as funky bars go you can't beat VS bar. It is just outside the old town, but still within walking distance. This has a very surreal modern feel to it. The front door is a submarine hatch and the inside is coloured purple and silver with monitors imbedded in the walls. They also do very nice naan bread, with all sorts of interesting fillings. Great for snack food. As for location it is a little more difficult to describe. It is on Parnu manatee just opposite the turn off to Sakala street.