Which is the correct version?

To me, I'd use the singular form "Either of the restaurants is expensive."

Wait for the teachers' correction, though.

is

That was tricky because it's a backwards way of putting it. I would normally expect "Both restaurants are expensive." The verb will sometimes conform with the nearest noun, but not this time, mostly because my ear tells me that "is" is idiomatic there. It could also be said that the plural noun is out of the equation because it is buried in a prepositional phrase.

anonymousEither of the restaurants is expensive.

The grammar books say that an "either of the {plural}" construction takes the singular.

CJ

Both of the restaurants are expensive.