Not surprising, for a town which has had to uproot, there's not much in the way of dining options in Muong Lay. If you're staying in town — at the Lan Anh of course — then eating there is probably your best bet. It has a reasonably varied menu of rice, noodles and stir fries, as well as breakfasts, and the food's tasty enough. Plus it saves the dark trek up to Highway 12.
If you're just passing through or need to escape the hotel then one place worth trying is the Son Hoa, on the intersection of Highway 12 and the road to the Lan Anh. It doesn't look much but wander in looking hungry and they'll sort something tasty out for you for around 40,000 VND.
Son Hoa: Town road, near the road into town, on the hill, Muong Lay. T: (0230) 385 3529.