The only decent place to stay in Yungay [1] is Hostal Gledel (Areas Graciani s/n, tel. 043/39-3048, US$5 pp). This very simple but clean hostel has solar-powered electricity and rooms with shared baths. The nicest rooms are upstairs.
While nothing fancy, Chicken Progreso (Areas Graciani s/n, tel. 043/58-4818, 7 a.m.–10 p.m. daily, US$2.50–5) serves up large portions of spit-roasted chicken with fries and a salad, or lomo saltado.
Restaurant Alpamayo (Km 255 of the highway, tel. 043/39-3090, 8 a.m.–p.m. daily, US$2–4) serves fortifying breakfasts of chicharrón and tamal and a range of Peruvian food throughout the day.
Links:
[1] http://www.moon.com/destinations/peru/huaraz-and-the-cordillera-blanca/callejon-de-huaylas/yungay