The menu in these parts is chicken, steak, and fish, and we usually recommend avoiding the fish this high in the mountains.
Llamaradas del Bosque (on the south side of the park, open 6:30 a.m.–8 p.m. Mon.-Sat.) is a favorite, serving three meals buffet-style for around $2, and its breakfasts are renowned for the city's best coffee.
La Merienda (one block east and one south of Hotel El Viajero) serves meals in a would-be disco atmosphere.
La Yunta (one block east and one south of Hospedaje El Viajero, closed Mon.) is higher quality and pricier, with live music many Thursdays and karaoke on the weekends.
Gigis (just south of the park, tel. 505/2732-2967, 11 a.m.–10 p.m., closed Wed.) has burgers and pasta served by a Nicaraguan who spent years in New York. He makes a mean steak sandwich—recommended.
La Cabaña (adjacent to Hotel Ben Moral, tel. 505/2732-2415) has good food in a pleasant atmosphere for under $8, with entertainment and dancing on the weekends.
La Esquinita (5 blocks south of the park, 7:30 a.m.–3 p.m.) is immaculately clean, with generous portions for about $5.
For great food and an amazing view of Ocotal [1] head out of town just a few kilometers toward Estelí [2] to Roca Dura (tel. 505/8853-7696 or 505/8834-6949, open 10 a.m.–11 p.m. Mon.–Thurs., 10 a.m.–12:30 a.m. Fri.–Sun. ) for chicken, steak, burgers, and a truly impressive view. A taxi there will run you about $1, or $0.25 by bus, daytime. This place is rapidly becoming the weekend party spot.
Links:
[1] http://www.moon.com/destinations/nicaragua/esteli/ocotal
[2] http://www.moon.com/destinations/nicaragua/esteli/city-esteli