Hello sioux, as with most of Portugal you can pay what you like for a meal but as a guide you will find it at best a third cheaper than at home. If you like fish then this is the place to get great fish without paying the earth for it, meat is also a good price.
We were there a few years ago so prices like most things have gone up from the prices I paid when we were there, but for a good plate of fish or meat (steak) you should find it about 20 euros each, that would include a starter say soup main meal and a bottle of wine.
There are two main places to eat in Funchal if you are on B&B one is the Harbour, there is even one boat that was once owned by the Beatles that is now a restaurant, although we never used any of these. The other is in the old fishermans quarter near the bus station in my mind this is the best area with lots of restaurants of all sorts, cannot remember any names but all the ones we tryed were were very good.

Dave

SIOUX, keep away from the restaurants near the marina, they are "tourist rip-off joints"! As said above, go to the Old Town near the bus station where there are many very good family restaurants. Try Arsnihio's for Fardo (Portuguese folk music) after you meal there. Just down the street there is "Gavioa" (sp?) The local speciality is "espada" which is fragrant white fish meat from the scabbard fish, an ugly looking brute but very tasty; not to be confused with "estepada" which is Portuguese cooked steak. There are many different meals you will enjoy, such as "chicken piri-piri" a speciality, again as mentioned a meal for 2 with wine shoiuld be about 40 euro; ask for "Vinho verde" wine, which is a young wine. It goes with everything.

Try this website for more info.

http://www.madeira-web.com/PagesUK/food-uk.html