The way to eat in Iceland for less $$ is to hit the grocery stores (Bonus, with the big pig on the sign) and stock up there, along with the bakeries that are all over the place.
Our lunch every day was sandwiches that we made with bread from the bakeries and cheese and meat from the grocery store, along with dried fruit/nuts we brought from home (Trader Joes, if you have that).
Dinner can be done cheaper if you don't mind a premade sandwich from the convenience stores/markets at the gas stations in the smaller towns, or share a pizza ($25-$30), or the great Icelandic hot dogs can suffice now and then (they really are very good).