I've eaten there twice. It's "nicer" inside and feels much classyier than most seaside joints. Our favorite, however is at the other end near "the rock". It's not fancy and thre are no indoor seats. So you always have to dress warm. They actually take fish right off the boats in front of their seating and do a lot of fried oysters, cod, crab (in the bliling water right next to the outside eating) and whatever else has been brought in-none of which is good for the heart but with a bottle of wine eating outside, dressed warmly, and at the base to the big rock-nothing finer.Usually we're soaking wet from being in the surf with our dog (Pepper) so that likely adds to the whole thing. There's another seafood restaurant just up the hill a few streets-can't think of the name (Dory house?) that's very nice inside and the food is great-just no seaside atmosphere.
I like Morro Bay primarily because the entire area is a leash free environment for our dog-and all other dogs.