The blast underscored the ongoing security threats in Mogadishu, despite the withdrawal by Islamist militant group al-Shabaab from the city in 2011 under military pressure.
It was not immediately clear who carried out yesterday's attack on the Village Restaurant, owned by well-known Somali businessman Ahmed Jama, who returned to his home country from London to set up his business against the advice of friends. The blasts hit the restaurant around lunchtime.
The restaurant, near the presidential palace, is popular with government workers and journalists and has been targeted before. It was busy at the time of the attacks.
In September last year two suicide bombers hit the same restaurant, killing at least 15 people.
Mohamed Yusuf, spokesman for the Mogadishu authorities, said that after the car bomb went off, a suicide bomber immediately blew himself up in the restaurant.
"First a car bomb exploded at the entrance of the restaurant, and when people converged inside a suicide bomber blew up himself," he said.
One of many expatriates to go home to help rebuild their war-ravaged country, Jama vowed he would not give up after the attack.
"My decision was to do something and as long as I live, I will continue - I'm a business guy with restaurants and I'm going to continue with that," he told the BBC at the time.
Since the overthrow of President Siad Barre in 1991, Somalia has seen clan-based warlords, Islamist militants and its neighbours all battling for control.
President Hassan Sheikh Mohamud took office a year ago in a UN-backed bid to end two decades of violence. Although the al-Shabab Islamist group was pushed out of Mogadishu in 2011, it has frequently staged attacks in the city since then.