Aren't these both correct ? Where is the best restaurant in the world? Asking for the location of the restaurant. What is the best restaurant in the world? Asking for the name of the restaurant.

A few examples: Where is the best restaurant in the world? The best restaurant in the world is in Dublin, Ireland. The best restaurant in the world is two miles away. The best restaurant in the world is in southern Italy. What is the best restaurant in the world? The best restaurant in the world is O'neil's Irish Pub. The best restaurant in the world is a seafood restaurant. The best restaurant in the world is my mother's kitchen.

I would say where is the best restaurant if asking the location

Karl, you explained it. Jesse only gave examples, without an actual explanation, which therefore needed a bit of interpretation.

Jesse M. Holmes got it. I did not see his comment when I typed mine. He gave in fact more choices. Yes both are correct and natural.