Two Lagos "Cheap and Cheerfuls" personally recomended by Barloventoexpert!
Go and see Sr.João at Churrasqueira Frangos S. João, just round the corner from the seagulls' (currently dry) roundabout.
Full Address: Urbanizacão Marina Sol, Lt 17 - Lj A, Lagos.
You can have a main dish with wine and/or beer for +- € 7 to € 8 per head.
Alternatively, Bom Apetite is another place where one can eat cheaply if one chooses carefully!
Again +- € 9 -10 per head for a main dish with wine.