Why is 'La folla è nel ristorante' given as a correct answer as well? Surely this means 'The crowd is in the restaurant' which has a different meaning?
A crowd is one entity - if everyone in a crowd is doing the same thing you'd use the he/she/it form. E.g. The crowd yells, but they yell. Make a bit more sense?
Why not 'allo ristorante' for 'in the restaurant'?