In the area where the festival takes place there are stands that sell local food. I recommend having lunch at one of these stands. I was told the food would not be very nice, but I found it to be ok.
You can have Tibetan food, which is mostly meat, yak or beef; or Chinese food, noodles or rice with vegetables and eggs.
In the town there are some restaurants, but most tourists have dinner in their hotels. Some even bring their food from home.