CAMPBELL is the new Los Gatos. The pedestrian-friendly stretch of East Campbell Avenue between Winchester Boulevard and the railroad tracks seems to add more hip boutiques, salons and restaurants by the month, and more are on the way. The latest entry into the city's revitalized downtown is Olio restaurant. The cafe serves simple but expertly prepared Mediterranean food that dips into the underexplored cuisines of North Africa. Although it's been open less than two months, it's become one of the city's best restaurants.

Chef Thomas Ricci and partner Merle Haughey opened Olio in a space formerly occupied by Mio Vincino restaurant. Ricci's kitchen experience includes stints at Lapis, Mandarin Oriental Silks and Michael Mina in San Francisco, Arcadia in San Jose and the Commune in Atlanta. While those restaurants were fancy, high-end places, Olio is a decidedly more casual, midpriced place that exudes a comfortable, yet elegant charm.

Flickering candle sconces warm the yellow walls on one side of the restaurant and give the place a Gypsy charm, while exposed brick on another wall adds to the rustic elegance. An open kitchen dominates the center of the restaurant and gives the place a homey intimacy, while an L-shaped bar that wraps around it lets you sit right in front of the action. Big front windows look out onto a small patio and the passing traffic on East Campbell Avenue.

Lunch was what first sold me on the restaurant. The small but well-chosen menu finds the sweet spot between low- and high-end with entrees topping out at $16. Although the dining room felt a little drafty, the bowl of creamy roasted tomato and basil soup ($6) was just the thing to warm me up. A rootsy bread salad with crusty chunks of bread soaking up a light vinaigrette is a classic Mediterranean dish and one of my favorites if done right. At Olio, Ricci substitutes the traditional baguette for grilled pita bread and adds lettuce greens, rough chunks of feta cheese, cucumbers, tomatoes and a few olives. It's a clever riff on the classic. I bet it will be even better with in-season tomatoes.

I loved Olio's sandwiches. The grilled lamb pita combines tender slices of marinated lamb with roasted bell peppers, arugula and a judicious application of a garlicky aioli pesto. The bread itself was perfectly toasted to give the sandwich a satisfying crunch. The veggie goat cheese panini ($8.50) is a solid vegetarian option. Grilled squash, roasted bell peppers, roasted tomatoes and a creamy herbed goat cheese were pressed tight between two slices of bread. Like the lamb sandwich, it was the toasted crunch of the bread that added the final touch that made this sandwich so good.

While lunches begin with a small dish of fruity olive oil and balsamic vinegar for dipping bread, dinner starts off with the olive oil and vinegar as well as a small dish of garlic and rosemary- spiked olive oil and a dish of olives. They're generous and delicious freebies. For dinner, I started off with the trio of Mediterranean dipping sauces ($9), baba ghanouj, hummus and raita. I loved the smoky and tangy baba ghanouj, but the hummus and raita (cucumber and yogurt) were good if not remarkable.

A better starter is the Moroccan spiced Dungeness crab cake ($13). I've been disappointed so many times by crab cakes that are heavy on bread crumb filler and skimp on the crab, but Olio's stout crab cake arrives crispy on the outside and full of creamy rich crab inside. I confess I couldn't detect the advertised Moroccan spices, but I liked the spicy carrot salad, cilantro purée and carrot-harissa (a North African chile-tomato-spice paste) emulsion served with it.

Grilled ahi is as common in these parts as burgers and fries, but Olio reworks the ubiquitous fish into a great dish ($19). The grilled tuna is marinated in Tunisian spices and served atop a tiny white bean ragout enlivened with roasted garlic, purÈed cilantro and the singular flavor of preserved lemons. While the fish is delicious on its own, it's really the combination of it with the other ingredients that makes the dish shine and avoid being just another plate of grilled ahi.

Paella Valenciana ($17) is another winner. The hearty and generous saffron-infused rice dish is loaded with prawns, mussels, clams, Portuguese sausage and chicken. For me, paella is often a mushy, indistinguishable glop, but here each ingredient sings its own tune that adds to a delicious whole.

The only entree that fell short was the eggplant parmigiana ($15). While the commingling red and green of the roasted tomato and basil sauces at the edge of plate was beautiful to look at, the dish itself was good but not anything special.

Desserts are uneven. Upon first bite, the port and red wine poached pear ($6) had an appealing mulled spice flavor to it but soon left a flat, almost bitter note. But the shredded, crunchy filo pastry filled with yogurt and mascarpone served with it was good. According to the menu, the huckleberry clafoutis ($6) is served with a crème fraîche ice cream, but on my visit is was paired with lemon ice cream. The berries conflicted with the lemon ice cream and made for a poor match. On their own the two were quite good.

As with many new restaurants, service can be a little rocky. Servers sometimes stumble as they recite details of the menu or field questions about the food. On my dinner visit our waiter couldn't remember who got what and ending up asking, in effect, "Who gets the fish?" But in spite of that the floor staff is friendly and aims to please.

As you leave, don't forget to grab a little box of mints from the reception desk. Instead of matches, Olio has white containers of mints with its name and address printed on them. It's a clever idea from one on the smartest new restaurants in town.