The story of Austin, Texas’s growth over the last couple of decades is both a triumph and a tragedy, depending on who you ask. The heavy flow of tech companies making their way into the city brought unprecedented wealth into Austin, but even as “big city” chefs and restaurants started to open and thrive, many long-standing ATX staples had to shut their doors because of the rising living costs.
Austin’s gentrification shows no signs of slowing down, so it’s important to celebrate and patronize the classic spots that remain as genuine and community-focused as ever. That’s where Habanero Cafe comes in.
A Family Affair From Past To Present
While Habanero Cafe first launched with its current name and concept in 1998, this South Austin diner’s history dates back even further. Owner Arturo Ibarra began working at Habanero Cafe’s predecessor, Dos Hermanos, as a young man in the early 1980s.
Dos Hermanos, which eventually operated four locations in South and East Austin, was owned by Ibarra’s father and uncle, and Ibarra’s siblings and cousins made up the bulk of the restaurant’s staff during those early years.
When Ibarra’s father and uncle decided to retire in the late 1990s, they sold three of their four Dos Hermanos restaurants in Austin to outside buyers, but the South Oltorf Street location was purchased by Arturo Ibarra himself. Even after rebranding as Habanero Cafe, Ibarra remained committed to his relatives’ relaxed community-based service style and continued to hire Ibarra family members as chefs, servers, and managers.
Credit:
Courtesy Habanero Cafe
A Reminder of “Old Austin” in A Fast-Changing City
Austin’s growth as a “foodie city” is shocking to those who haven’t visited in decades (and even surprises current Austinites who’ve lived there for years). The Michelin Guide recently made its way to Texas and honored seven Austin restaurants with stars in 2024. Chefs from culinary hotspots like Los Angeles, New York City, and Mexico City have opened Austin restaurants, and the average price of a restaurant entree and a craft cocktail seems to be inching up every day.
In this climate, it’s understandable to question whether a no-frills eatery that doesn’t care about social media fame or critical accolades can succeed in a city that’s evolving at warp speed. Luckily, Habanero Cafe keeps on keepin’ on, even as its South Austin neighborhood—once a very “working-class” area—becomes increasingly populated by high-rise condos and upscale shopping and dining destinations.
In terms of its design, Habanero Cafe has no interest in bells and whistles. Tile floors, tables topped with wood-grain Formica, mismatched diner chairs, neon Dos Equis and Negra Modelo signs, and kitschy vintage posters can all be found here, and because Habanero Cafe only serves breakfast and lunch (the restaurant is open from 7 a.m. to 3 p.m. every day), guests will always be surrounded by natural light spilling in through the dining room windows (which may feel like a positive or negative, depending on how you spent the previous night).
Habanero Cafe features attentive servers who take your order at your table, but payment happens at the counter in the front foyer. This simple and straightforward luncheonette never tries to overcomplicate the diner experience, and that attitude carries through to the menu.
Credit:
Courtesy Habanero Cafe
Classic Tex-Mex With Huge Portions and Affordable Prices
Even as “modern” Mexican restaurants continue to pop up all over Austin, Habanero Cafe holds firm to its old school Tex-Mex roots. Whether you’re beginning your day early or find yourself off to a slow start, you can find hearty breakfast options at Habanero Cafe.
Staple dishes like migas (eggs scrambled with diced tomatoes, onions, peppers, and corn tortilla pieces) are available as platters or as tacos, and those who want more protein can opt for dishes like the El Patron (two over-easy eggs with beef fajita and salsa ranchera). In lieu of hash browns or home fries, Habanero Cafe serves its breakfast entrees with a side of french fries, which prove extremely useful for anyone battling an a.m. headache (alcohol-induced or otherwise).
During lunch hours (from 11 a.m. to 3 p.m.), guests can take advantage of Habanero Cafe’s famous daily specials, which provide the best possible value for your dollar. Highlights include Tuesday’s $9.95 enchilada plate special (with two beef, chicken, or cheese enchiladas drowned in salsa rojo or verdes and served with a huge portion of rice and beans) and Thursday’s $12.95 carne guisada special (with a rich and spicy beef stew served with fresh tortillas and rice & beans).
Other Tex-Mex favorites like well-seasoned and perfectly gooey queso and sizzling fajita skillets are always available, and the entrees on Habanero Cafe’s menu max out at $19.95, with many selections under $15. No one ever leaves Habanero Cafe hungry, and you’re almost guaranteed to walk out the door with leftovers. If you’re craving a sweet treat at the end of your meal, be sure to order Habanero Cafe’s famous cinnamon and frothy horchata.
Habanero Cafe feels like part of a dying breed in 2025 Austin, but thanks to the devotion of its community, this South Austin landmark seems destined to continue providing Austinites with big and flavorful meals at reasonable prices—a worthy goal and one that deserves all of the love and appreciation that this retro Tex-Mex diner already receives.