"The target was Le Jardin restaurant. We don't know yet if there were any casualties," a Western official said.
The Taliban claimed responsibility for the attack. The blast is the latest in a series of attacks around Afghanistan in recent weeks.
It came just days after Pakistan's powerful army chief General Raheel Sharif visited Kabul to try to prepare the ground for fresh peace talks with the resurgent Taliban.
Both sides agreed to hold a first round of dialogue between Afghanistan, Pakistan, US and China on January 11 to lay out a comprehensive roadmap for peace, officials in Kabul said.
Pakistan -- the Taliban's historic backers -- hosted a milestone first round of talks in July but the negotiations stalled when the insurgents belatedly confirmed the death of long time leader Mullah Omar.
Afghanistan sees the support of Pakistan as vital to bring the Taliban to the negotiating table.
But despite the growing bonhomie with Islamabad, analysts caution that any substantive talks are still a long way off.
Afghan forces are currently battling to push out Taliban insurgents who seized large swathes of the key opium-rich district of Sangin in the southern province of Helmand.
Observers say the intensifying insurgency highlights a push by the insurgents to make more military gains to try to achieve greater concessions during talks.
Image: Afghan policemen and a fire-fighter work at the site of an explosion in Kabul, Afghanistan. Photograph: Omar Sobhani/ Reuters
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