"Two police officers and five civilians lost their lives in the attack," Xinhua news agency quoted Bishar Ali Gedi, Mogadishu police chief, as saying.
After the suicide bombing on late Thursday, security forces killed two attackers and captured another one in a gun battle with the militants on Friday and "rescued most of the civilians who were stranded inside the restaurant building," due to the fighting, Gedi said.
The targeted restaurant is located on the Lido beach near the Turkish embassy compound.
The Al-Shabaab Islamist group, which is fighting against the Somali government, has claimed responsibility for the attack.
The police said the death toll could rise as some of those hospitalised had sustained serious injuries.
Al-Shabaab militants have carried out frequent attacks in Mogadishu. The latest one comes ahead of Somalia's elections due in September and October.
