The 1099-K form is a recent requirement from the IRS placed on merchant account providers and electronic payment processors. These are the companies that set up merchant accounts for small businesses and individuals to accept credit cards.
If the merchant (you, the restaurant owner) receives over $20,000 from 200 or more transactions, the provider must report the total payments to the IRS, and send a 1099-K form to the merchant. Most restaurant owners have already received the form for last year, since they will certainly meet the minimum requirement.
The amount reported on the 1099-K does not need to be entered directly on the business tax return. The IRS will compare the amount on the 1099-K to the total reported sales, and then compare that ratio to other businesses in the same industry. If the credit card payments are very near the total sales in an industry where averages show a significant amount of cash sales, or if total sales reported is less than the card payments, they will send a letter to the business owner.
In some cases, there may be legitimate reasons for the credit card payments to exceed total sales, since the amount on the 1099-K will include tax and tips, and lack adjustments for refunds. If the total sales paid by cash is less than the tax and tips paid by credit card, then the card payments would be higher than the total sales.
Restaurants in some areas will be inclined to have a higher ratio of card paying customers, so if the IRS compares to overall industry averages, those locations may be more likely to get a letter.
There are several different letters they may send, depending on how severe the discrepancy. The National Association of Tax Professionals has an article describing the different letters, and the recommended response to each letter. One is merely informational, while the others require a response.
The business may need to provide details of the tax, tips, refunds, and any other adjustments to explain any variation between the card payments and total sales. That amount of detail is not necessarily included on the tax return, but any business with a good bookkeeping system should not have a problem providing the required information.