I would usually only say "IN the restaurant" if it was juxtaposed in context with some kind of outside option, e.g. "Shall we go to the food trucks, or would you rather eat in a restaurant". Even then I'd probably use "at".
Another scenario in which I might say "IN the restaurant" would be if I were talking on the phone with someone who was looking for me, and I was telling them I was "in" as opposed to "out".
Just my American perspective.
Preposition choices are often driven by regional/dialectal variation, personal preference, or just spur of the moment whim. I usually say "at" a restaurant but I do sometimes say "in". The meaning is clear. I say "pouring rain" but the English for some reason add a redundant preposition and say "pouring with rain" which I always think sounds like it could be pouring with custard or beer on another occasion. It's called colour and it's great.
A cultural question here: In smaller towns and villages in Italy "the square" is the place to be; it's where everyone hangs out, both young and old, individuals and groups. It's usually also the old market place, even if nowadays there's no longer a regular market and people come to cafés and bars. Now I was wondering if it used to be/ still is like that in Ireland. I've seen the square in Kildare, which kinda seems to fit the picture, but there's too much car traffic and the weather was too cold (in February) for people to sit outside. I haven't seen such a square in Galway (and Dublin, as a city, is of course different). But what about smaller towns and villages?