In Stephen Sondheim's and James Lapine's modern fairytale classic, real life takes over from happy-ever-after.

The same could be said of this American Fiasco Theatre production of the 1987 musical which here begins not with the normal "Once upon a time" but with actress Jessie Austrian explaining that since the show's successful run in New York she has become so visibly pregnant (by the pleased and proudlooking co-director and performer Noah Brody to her left) that we're all just going to have to use our imagination while she plays her decidedly unpregnant character, the Baker's Wife.

Otherwise both Wife and Baker (Ben Steinfeld) are going to appear awfully unobservant as they flail around the woods attempting to lift the curse that's keeping them childless.

For those coming to this achingly clever show for the first time, the couple are the characters Lapine created to glue together their more famous mythical counterparts. On her way to visiting her grandma, Little Red pops into the Baker's shop to buy some sweets. Only after she leaves does the bakers' neighbour from hell, The Witch, include Little Red's blood-red cape as one of the ingredients that will lift the curse. They also need to find a milk-white cow (one such is owned by Jack of Beanstalk fame) a golden slipper (Cinderella's will do) and yellow hair (Rapunzel happens to be letting some down from a local tower).

In retelling their stories, most of this cast double-up on characters. But the key to Brody and Steinfeld's fabulously basic production, which is performed on bare boards and in front of a curtain of galleon-grade ropes that evoke the all-important woods, is that everyone also plays an array of seemingly random instruments that might have been rescued from a pawn shop.

Little Red turns out to be a mean trumpeter, the shy and awkward Jack is as smooth as silk when blowing a french horn while Prince Charming dazzles on the spoons.

Binding them, and Sondheim's score, is a virtuoso pianist called Evan Rees whose bashed upright is more music hall than musical. Some of the best revivals of Sondheim have been done in this multi-tasking way. It reveals the chamber piece that can lie hidden within these big shows. Something about the composer/lyricist's intricacy suits intimacy. And what with that opening announcement, occasional forays into the stalls and some friendly interaction with the audience, the evening has the feel of being mounted in a local village hall, which might do it no favours if the Menier is thinking in terms of a West End transfer, as it normally does.

Slightly more problematic is that Steinfeld and Brody haven't quite found the antidote to the show's inherent long-windedness. The first couple of acts are so fulsomely plotted the audience have to be reminded to come back after the interval.

It's here that the children's stories become truly adult. Cinderella's prince is revealed as a serial adulterer, Little Red has the street smarts of a gangster, and Jack's adventure is brining death and calamity in the form of a vengeful giant's wife onto he world. The narrative and emotional unravelling takes a long time to fully unspool. And not every inventive flourish flourishes. Little Red's big bad wolf looks more like a decapitated Alsatian.

Quite how you shorten the show's length without jettisoning some of the most rewarding songs in musical theatre is the problem. It's easy to get carried away with Sondheim's genius, but there's something Shakespearian about his insight into the human condition. In lesser hands the song Children Will Listen would have been sentimental mush about innocence.

In Sondheim's it's a warning to parents about the effect of what they say and how they say it. And when the songs aren't reaching into the soul, they are serving up delicious linguistic gags.

"There's no possible way, to describe what you feel," sings the Wolf to Little Red, "When you're talking to your meal!"

And you wouldn't want to cut a nano-second of that.