Located on the corner of Russell and Flinders streets, the realisation of its potential – being opposite Federation Square and the Forum Theatre – required an innovative approach to get things moving again.

Finally, that moment has come with Newline Design's refurbishment of a ground-level pub and a restaurant, Dutchess, on level two.

While the pub offers patrons the opportunity for a quick drink before heading to the Melbourne Cricket Ground or other sporting stadiums, it's a different matter upstairs at the Dutchess.

Covering the level and framed by plane trees, the moody interior of Dutchess – named after a band – suggests a longer and more indulgent lunch or dinner.

"Our brief was to offer diners a different offering to the pub. Here, the focus is on fine dining, but without that stitched-up feel," architect Jon Mikulic, director of Newline Design, says, running his fingers over the linen-free tabletops.

Accessed from a lift or a staircase leading from the pub, patrons first see a wall of back macrame, created by Sarah Parkes of label Smalltown. Used to frame the front bar, as well as a private dining room, there's a sense of craft and homeliness on arrival.

"I wanted to separate the void [over the staircase], but also add texture to the space," Mikulic says.

He was given a relatively open brief to transform the 450-square-metre floor plate, working closely with colleague Liz Doube.

Patrons can enjoy a pre-dinner drink from the black granite bar or sit at the window on a Philippe Starck "ghost" stool before making their way to a table.

Rather than a series of high-backed booths that segment the space, Newline Design has created sight lines to Federation Square and beyond. Leather-covered, banquet-style seating snakes around the perimeter to take advantage of the views, as well as strengthening the connection to guests at other tables.

"We were conscious of creating privacy and a sense of intimacy. But there's also something quite pleasurable about seeing other patrons enjoy themselves," Mikulic says.

He also has designed the furniture and the cloud-like spiral-feature light fitting.

As well as accentuating the leafy aspect, Mikulic has taken cues from the triangular forms of Federation Square with a golden, laser-cut steel DJ booth and host pedestal.

One of the most dramatic Dutchess features is a wall made from thousands of ends of cypress timber. Concealing the kitchen, the wall, like Parkes' macrame, celebrates the handmade.

Rather than just creating a continuous timber wall, Mikulic has included a window for the display of aged beef, as well as a wine cellar. The latter accommodates a serving station.

"The idea of the wall came from an old-fashioned butcher's block," Mikulic says.

Unlike the trend for open kitchens in restaurants, the Dutchess kitchen is "back of house", only visible if one's nose is pressed on the Georgian wire glass set with the timber-clad wall.

"From my experience, there's too much interference from kitchens," Mikulic says.

"This way, there isn't the noise or the food smells. And the timber wall also improves the acoustics for diners."

Taking a comfortable approach was in Mikulic's mind during the design phase.

The restaurant, which seats 80 people, could have accommodated an additional 50.

"I think it's important to come into a restaurant, feel comfortable, and not as though you're in the middle of the next table's conversation," he says.