The official, who spoke on condition of anonymity because he is not authorised to speak to the media, said the explosion appeared to have hit "Le Jardin", one of a small number of restaurants in Kabul still frequented by foreigners.
No information on damage or casualties was immediately available, Reuters reported.
The explosion came days after the Taliban claimed responsibility for a suicide attack near Kabul airport that killed one person and wounded 33 others, the latest in a series of suicide attacks in the city.
The attacks have coincided with efforts to revive the stalled peace process with the Taliban that broke down in July.
Officials from Afghanistan, Pakistan, the United States and China are due to meet in Pakistan on Jan. 11 for a meeting aimed at laying the ground for talks with the insurgents.