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Though Luganville is small, there's some really good dining options.
Hotel Santo does fantastic local steak. It's like stepping back in time to about 1974 in decor, but that's all part of the fun! The hotel is an institution in this town.
Coral Quays, a little bit out of the main town, is a really lovely garden setting with quality food, including local seafood. Get there before dark and enjoy a drink on their wide verandah that looks out over the water.
At Deco Stop you'll be rubbing shoulders with some weary divers who just want to fuel up before they go to bed. They have a pool and a great view. The food is good value and usually really tasty.
Ocean King Chinese in the Apex Garden hotel. This is some of the best Chinese food you'll get anywhere. It's prepared so well and it's very reasonably priced. You must try the steamed dim sim and the lemon chicken.
Try local style food in the little eating houses in Unity Park or by the market. These are super tasty, super filling and super cheap. Awesome spots to watch the world go by too.
If you're not staying at Aore Resort, it's a great place to go for lunch and get a real melanesian island feel. Moyyan House by the Sea also does a nice lunch, overlooking a beautiful beach where you can cool off afterwards.