Most small hotels include breakfast in Chefchaouen. Simpler fare is usually some French bread with jam. Snacks are readily available all over town and there are a couple of good bakeries. Chefchaouen has several very good restaurants, including the one run by the owners of the Casa Hassan, the Restaurant Tissemlal. The Tagine I had there was one of the best I had in Morocco.
Other recommended restaurants in the medina include La Lampe Magique and the Restaurant Assada ask a local person to direct you. Restaurants tend to not take reservations, so get there early if it looks like there are a lot of tourists around. Early dining in Morocco means around 7pm.