Hi J.,
I'm from Austin and have been to Fredericksburg many times growing up. There are a number of really great shops, restaurants, etc. on the main street going through town, and even more tucked away off the main drag. One breakfast place in particular is fantastic... However, I can't remember the name of any of them!
My parents still live in Austin and I'll send your message over to my mom and see if she can think of anything. They've gone and stayed in BnB's for anniversary's, etc.
C.
OK - here is my mom's response...
I can't remember the specific names of places to stay, but there are dozens and dozens of them. Fredericksburg has several web sites through their Chamber of Commerce that are clearing houses for groups of B&B's. Also, there is a wonderful herb farm that has been featured in several magazines, such as Southern Living, House Beautiful, etc. I think if she googles herb farm + Fredericksburg, Texas, it should come up. It has B&B type accommodations.
As far as places to eat, I definitely would book a lunch for the group at the Peachtree Tea Room. I absolutely love eating there, but reservations are a must, especially if they have a group wanting to eat together. She should note that there are many things named "Peachtree" this-or-that in F'burg. She just needs to make sure she's talking to the Peachtree Tea Room (it also has a gift shop and the main location is on the street that heads out toward Kerrville).
Otherwise, the downtown area is small and completely accessible on foot. I don't know that they'd need to do a lot of research on that, as you can just walk around and visit the many, many shops all over the main street and the side streets leading right off of it.
A fun place for coffee and sweets is the "Rather Sweet Bakery." It's owned by Dan Rather's niece, Rebecca, who is a master pastry chef. I understand she's also opened a full restaurant to go along with it (not sure if it's in the same location right on main street, or if it's in another location). I expect Rather Sweet has a web site.
This makes me want to go to Fredericksburg!
Love you,
me