To make for clean and readable tests, do your mocking in a base model that your Eloquent models extend.

BaseModel.php

<?php

class BaseModel extends Eloquent {
  public static function shouldReceive()
  {
    $repo = get_called_class() . 'RepositoryInterface';
    $mock = Mockery::mock($repo);

    App::instance($repo, $mock);

    return call_user_func_array(array($mock, 'shouldReceive'), func_get_args());
  }
}

ReadableLaravelTests.php

<?php

class PostsTest extends TestCase {
  public function testAllPosts()
  {
    // This will mock the PostRepository interface, update the instance
    // that will be injected into the controller (use DI), and stub the getAll method.
    // This way, the DB will never be hit.
    Post::shouldReceive('getAll')->andReturn('foo');

    // Call the route.
    $response = $this->call('GET', 'posts');

    // Make sure that the request was successful.
    $this->assertTrue($response->isOk());

    // also make sure that $posts is bound to the view
    $this->assertEquals('foo', $response->getOriginalContent()->posts);
  }
}

@danharper Just saw your question. My Repository tests also use sqlite in memory, rather than mocking the Foo. I get the same bug as you do when I try to mock Foo. I'm not certain, but I think that the problem is that all() is a static method.

@danharper in the framework tests, they extend the Eloquent class with a stub, to replace the newQuery method. IT is a bit convoluted, but it might work:
https://github.com/laravel/framework/blob/master/tests/Database/DatabaseEloquentModelTest.php

@karptonite Ah thanks, I'll give it a try! Only just noticed your reply, guess GitHub doesn't create notifications on mentions in Gists.

I had trouble using this snippet. I've found the problem to be namespaces. I thought I would share my modified code.

My repositories are in the Repositories namespace and models are in the Models namespace.

public static function shouldReceive($args)
{
    $calledClassParts = explode('\\', get_called_class());
    $calledClass = end($calledClassParts);

    $repo = 'Repositories\\' . $calledClass . 'RepositoryInterface';
    $mock = Mockery::mock($repo);

    App::instance($repo, $mock);

    return call_user_func_array([$mock, 'shouldReceive'], func_get_args());
}