That proposed sentence is not natural, and it sounds like foreigner English. It would be better just to say, “He’s at lunch,” or, “He’s away at lunch.” You can even say, “He’s taken off for lunch,” or, “He’s not back from lunch yet.” There are a lot of things you can say.
In slang, “out to lunch” doesn’t mean “off the wall” or “not right in the head”. It means that a person doesn’t pay much attention or isn’t very perceptive, and so he reacts to various situations in inappropriate ways.
Interestingly enough, now that I think of it, a person who simply doesn’t know something isn’t out to lunch. Being out to lunch requires that you not know something, that you don’t know you don’t know it, and that you don’t make any attempts to understand it (probably because you don’t know you don’t understand). Sometimes it’s the opposite of the idiom “on the ball”.
Examples of people who are out to lunch would be:
[code]-- A good-hearted manager who meets a girl with a lot of problems, feels sorry for her and gives her a job in order to boost her self-esteem and make her into a normal person. Meanwhile, the girl does next to no work, causes trouble among the staff, manipulates the secretaries and the upper management against her own boss, and never changes. The good-hearted manager nonetheless keeps thinking that change is just around the corner. That manager is out to lunch.
– An entrepreneur who decides to start a business in a field he knows nothing about, and he doesn’t even learn about it first. He hires experienced professionals in the business his company is engaged in, but because he’s the boss, he insists on being a complete hands-on manager. This leads to a lot of trouble. When an employee asks permission to do some normal thing, the boss doesn’t understand the question, but instead of asking for an explanation, he gives an answer that doesn’t make any sense, and then he walks away. That entrepreneur is out to lunch.
– There is a bloody Marxist revolution in a Latin American country. The guerilla forces trying to overthrow the democracy were founded and are led by an upper-class philosophy professor and other radicals from the privileged classes. They come to the United States, give speeches and collect money. Some Americans think that, because the radicals say they’re Marxist, they must really be agrarian reformers from the oppressed classes, so they start writing checks. These Americans are out to lunch.
– A guy and his sister, in their 20s, think that the mentally ill are kind of like friendly cartoon characters, cute bunnies or some kind of mascots. They hear that the crazy woman who walks up and down the street in the restaurant district mumbling to herself has a birthday today, so they walk around the neighborhood looking for her. When they finally see her coming, they spread their arms for a hug and say, “HAPPY BIRTHDAY!” The woman jumps out of the way, glares at them viciously, and growls at them like a zoo animal. That guy and his sister were out to lunch.[/code]
