Like any other African city there are a dozen of small dukas or stands where you can buy food. It's perfectly fine and safe too eat (mostly - if you have a delicate stomach or aren't used to travelling you might experience some discomfort). In Sengerema, one of my favourite places to go for chips mishkaki was Uncle Hotel. It's not a hotel, but a place where they sell food and drinks by the road. They have some plastic chairs and it's a good place to sit and watch life go by as it's just opposite the market.
Favorite Dish: Chips mishkaki (chips served with grilled goat meat) without a doubt, but they also make ugali (a dish made of maize and cassava flour mixed with water) and tilapia (best fish ever!) and chips mayai (with eggs).
Well.... the name is kind of misleading as there is absolutely nothing VIP about this 'restaurant'! But then again, I have only seen well-to-do Tanzanians in here, so maybe it's not completely wrong. Its more of a dirty, small room with 4 raggedy tables than it is a restaurant, but it's the only restaurant'like thing in town. Here you can (sometimes) get kuku with green bananas, rice or ugali. Otherwise it's beans or fish. Once a month there might be a chance of getting rice pilau!
Favorite Dish: They serve perfectly fine food, and because you can eat inside, you won't have people staring at you while you eat.