In Covilhã it's tricky to find something really special with that budget, but you've got some decent options. Most Portuguese restaurants in the area can offer good value for money, especially if you go for more traditional dishes. With 40 euros you can eat well (starter, main course and a drink), but you need to pick a place that isn't too touristy so they don't inflate the prices on you.
My suggestion is to actually ask local people or search Google Maps/TripAdvisor with a price filter, because the area isn't really known for that kind of event. There are always traditional Portuguese food places that do good work and can accommodate groups without a problem - contact them in advance, explain it's a birthday, and often you can get a special dish or a discount. The Italy question is trickier in Covilhã, but honestly, well-made Portuguese food is way more interesting for a group party 😊 and you still stay within budget.