Translation:Your older sister is at the restaurant.
Please don't punish spelling: I spelled "restaurant" as "restaraunt" and was marked wrong ^_^
In Taiwan "飯館/饭馆" is used but not as common as "餐廳/餐厅(cāntīng)."
Besides, "飯館/饭馆" is always an independently building (館/馆 itself means building) but "餐廳/餐厅" can also be used as a cafeteria inside a school. Another difference is that we usually don't call a Western or expensive restaurant "飯館/饭馆."
If you feel confused, I suggest that "餐廳/餐厅" is a safe choice.
里 needs to be added to this sentence if they want to specifically indicate that she's "at" the restaurant but inside. For instance, 家里 没有 人 translates as "there's no one at home" but what it literally means is that there's no one inside the house, vs 没有 人 在 家, which also translates as "there's no one home" but it could mean anywhere at the house, inside or outside.
Wow, talk about nit picky. This is the huge problem with this program, I am spending more time guessing what English they want me to write than I am working on Chinese. AT the restaurant works better and is more likely to be heard in native English. Nothing wrong with IN the restaurant but it should take "at" reported