The explosion occurred at around 8.30am at the restaurant in Jhabua district, in Madhya Pradesh state, as dozens of office workers and schoolchildren were having breakfast on Saturday, senior district police official Seema Alava said.
"The restaurant was in a tightly packed locality and a lot of people were here having breakfast, that is why the casualties are so high," Alava said.
Television footage showed scores of people and rescue workers using their bare hands to shift mangled heaps of steel and concrete of the crumbled buildings while police cordoned off the area.
Alava said the intensity of the blast knocked down a neighbouring building and damaged several others.
Bodies lay amid the rubble of the collapsed restaurant and twisted motorcycles and debris were strewn outside, as a crowd of onlookers searched for survivors.
a local medical officer, said Arun Sharma Around 100 people were also injured in the blast.