This is truly a hidden gem! I was staying at the nearby AC Hotel in Alcala and I was recommended…read morethis chocolateria by the reception. Parking can be a bit hard to find on the street as this is Spain after all but it's worth it.
The fresh churros are amazing and the hot chocolate is very rich and pairs very well. The prices are very attractive at about 3 Euros per person. Also, the locals all hang out here so it's a great place to get to know some people. However, the only Spanish you need to know to order from here is "Churros con chocolate, por favor"!. This place is much better than the tourist traps in downtown Madrid.