Most of the restaurants in Masaya cater to locals, so it's a great chance to eat local food with the locals. Here's our recommendations:
Fruti Fruti: The clue is in the name! Great smoothies, shakes and the omelets are good too!
Comida Criolla: No contest! The best place to eat local is on the corner ofParque Central packed with local residents and workers, Hot buffet style servings so you choose a bit of this with a bit of that and the fruit juices are made with fresh local fruits. Friendly service, nice view of the square and all for less than USD4!!
La Jarochita: Good Mexican food, big portions. Try and get a balcony table upstairs for free people watching
Alf's: Great spicy wings and other bar staples, good quality pool tables popular with 20 something locals, theres a small club next door!
Telepizza: Near the church in the square, good Chicago style pizza. They'll deliver to your hotel.