Buy fresh pastries and juice at Repostería Don Marcos, a block east of the park, an easy breakfast en route between San Juan del Sur [1] and the boat to Ometepe [2].
The best coffee in town can be had at Repostería Ballesteros (across from the Nicarao Hotel), where the outdoor seating lends itself to some quality people-watching and their pastries are a nationwide sensation.
Possibly the lowest-price lunch in town is Soda Rayuela (open 7 a.m.–10 p.m. daily), serving $1 sandwiches and burgers and $4 dishes. Across the street from the Iglesia San Pedro is Pizza Hot (closed Mon.) with outdoor tables and an Eskimo next door for dessert.
In the same price range is Hotter’s Pizza, around the corner from the Texaco, with outdoor seating and karaoke some Wednesdays. During the evening, a number of typical fritangas set up shop in the plaza, and most of the bars listed in the Entertainment and Events section have reasonable food as well.
Pollo Dorado (closest to the center of town) and Super Pollo (near the market) sell chicken your way. On the southwest corner of the park is Chop Suey ($5–7 a plate), a Chinese place not far off the mark, though all the dishes have been subtly adapted to suit the Nicaraguan palate.
El Messon (south side of Iglesia de San Francisco), serves a decent Nicaraguan buffet lunch as well as caballo bayo, a hearty stew. The most upscale restaurant in Rivas [3] is in the Hotel Cacique Nicarao.
Links:
[1] http://www.moon.com/destinations/nicaragua/southwest-coast
[2] http://www.moon.com/destinations/nicaragua/ometepe-and-rivas/la-isla-de-ometepe
[3] http://www.moon.com/destinations/nicaragua/ometepe-and-rivas/rivas