The only notable restaurant in Kratie that is not attached to a guesthouse is Red Sun Falling, established in 2003. Run by eccentric Joe, a former bookstore manager from Chicago, the restaurant has a small but interesting library as well as some good food. The Full Monty breakfast here had been repeatedly described to us as the best breakfast in Cambodia, so we had to try it. It's huge -- we went back to bed after failing to eat all of it. The other food can be a bit hit and miss, but aside from the riverfront tables, this is the best place in town for a sundowner and is a good spot to meet others. Joe's a great source of advice and his stories are endless.
One of the best Khmer restaurants in town, according to locals as well as personal experience, doesn't have a sign in English script, but it's across from the central gas station near where the share taxis depart from, a couple of doors to the left of the Department of Cults and Religion office. It looks like a typical roadside Khmer restaurant, with high-backed wooden chairs and TVs blasting Khmer comedy, but the food is exceptional and they have a limited English menu. Try the Mekong fish with ginger; it's excellent.
Another popular Khmer restaurant is the one attached to Heng Heng I guesthouse, across the street from You Hong II, facing the river. We didn't try it, but it's large, has a comprehensive menu, and is always packed with Cambodians -- usually a good sign.
The guesthouses all have their own restaurants but Balcony stands above all the other guesthouses in town for its solid Khmer food offerings, and the setting on a second-floor veranda is near unbeatable for sunset. Star Guesthouse is also known to have good Western food but we found the Asian offerings to be bland and mediocre -- as was the case with You Hong II's.