a restaurant sits people

I don't think I've heard it, but it seems reasonable as a casual alternative to the more correct 'How many does this restaurant seat?'

AnonymousIs this idiom?restaurant sits people?

No, not an idiom.
Look at this definition from the http://oxforddictionaries.com/definition/sit?q=sit :

[with object] (of a table, room, or building) be large enough for (a specified number of

AnonymousHow many people can this restaurant sit?

Not wrong but, this is what is commonly said : what is the capacity of the restaurant?

Hi,

MM is correct: sit means seat in your example. Seat is more commonly used in this case.

Sit (or, more commonly, seat) - to have enough seats for a particular number of people.

How many people does this restaurant sit [= seat]? This restaurant sits [= seats] fifty.

Regards