Its a restaurant (like tapas, but Dalmation-style) and I recommend it because the staff are lovely, the food is outstanding (try the drunken figs!), and best of all, you sit at upturned half-barrels and drink local wine out of tumblers in the candlelight - there are no electric lights in there. Perfect.
Hvar Town, wander and you'll find it. I think its near sweet and pretty zimmer frei bar (the one with the white laundry hanging outside - love the bloomers).
Updates
Sadly we couldn't find this place - maybe we were looking in the wrong area but we couln't even find laundry outside the other place!! Ended up buying very nice but fattening pastries on the square and eating them on the front.
Is this your business?