As a Luray Native, I can help you out on the dinning choices...
Beware of the restaurants on or at the foot of the mountains. These places are hit and miss. Sometimes they are excellent and sometimes they are not. They survive off of the tourist traffic. You will often see a lot of cars, but beware. There are also a lot of small bakery's, deli's, coffee shops, and such around town. If you like those kind of things, give them a try, I personally did not list any of those.
Breakfast
Hawksbill Diner (1388 E Main St, Stanley, VA 22851)
Dinner/Home Cooking that cheap and quick. Limited Seating.
Uncle Bucks (42 E Main St, Luray, VA 22835)
Family Food/Bar - Decent meal and OK prices
Fairview Grocery Store (101 S Antioch Rd, Luray, VA 22835)
Country Store with very limited seating. Limited choices, but this is where the farmers eat every morning. They make fresh homemade donuts on Sat.
Best Western Intown BREAKFAST ONLY (410 W Main St, Luray, VA 22835)
Very popular with Golfers, but a decent breakfast on Main Street.
Lunch
Artisans Grill (2 E Main St, Luray, VA 22835)
Upscale Hamburger Grill - Hamburgers run around $6-8, but they have some fairly pricey items. 2012 they was rated best hamburger in Valley.
Hawksbill Diner (1388 E Main St, Stanley, VA 22851)
Dinner/Home Cooking that cheap and quick. Limited Seating.
Uncle Bucks (42 E Main St, Luray, VA 22835)
Family Food/Bar - Decent meal and OK prices
Main Street Deli (23 W Main St, Luray, VA 22835)
Small Deli, that does very good sandwiches. Great place to pickup a To-Go-Order.
Fairview Grocery Store (101 S Antioch Rd, Luray, VA 22835)
Country Store with very limited seating. Limited choices, but this is where the farmers eat every morning. They make fresh homemade donuts on Sat.
Dinner
Also see any of the LUNCH CHOICES
Lurays Southern Grill (1599 U.S. 340 Business Luray, VA 22835)
Seafood and Steak. Meals range from $8-25. Probably the best steak and seafood in town. Limited to evening hours only.
Johnny Appleseed Restaurants (162 W Old Cross Rd, New Market, VA 22844)
Home Style cooking, kinda like Cracker Barrel. Good Fried Chicken.
Joe's Steakhouse (708 S Royal Ave, Front Royal, VA 22630)
This is not my cup of tea, but meany people like it. There is also one in Woodstock.
Rancho Viejo (Main Street Luray, VA)
Nice Mexican Style food. Good service and fast. Try to the Fajita Nachos is you want a simple, but filling meal.