'La Maison', running out of Islamabad's F7-1, was not allowing Pakistanis in, citing the French style of cooking that uses wine.
Also, the food was not halal and even pork was served.
The controversial policy had led to a storm on various social media networks, with many comparing the policy to apartheid and the infamous colonial boards outside clubs in India during British rule.
The momentum against the restaurant was started by Cyril Almeida, senior journalist working with a leading Pakistani daily, who launched a Twitter war against the restaurant.
The restaurant-owner Philippe Lafforgue wrote to him, claiming he is changing his policy.
Lafforgue, however, continued to bar Pakistanis.
"What can I do I am just trying to respect the local culture. Pakistanis with dual nationality are allowed," Lafforgue had said prior to the raid.
"But after consulting the authorities, my advisor and my partner, I am telling you it is impossible to open a place to the public when we serve non-halal food. I cannot change the recipes of French food," he had said in a letter.
"So we will stand by our policies. Everybody is welcome, even Pakistani people with a dual nationality. I don't want to hurt the sensitivities of Muslim people."
He said he had "just opened this place to give to the people an authentic French cuisine... And it is not compatible with the faith of the people here. So it will remain private".
This is not the first such incident in Islamabad. In 2009, another French restaurant 'The Cordon Rouge' hung a "foreigners only" sign, which was later removed after protests.
According to police sources, they recovered huge quantity of illegal liquor from 'La Maison'. The raid was carried out by the police with TV camera crews in tow.
The small restaurant running out of Lafforgue's house, was a hit with the expats. One had to make prior booking, giving international passport details.
'La Maison' was similar to the New York-style "secret restaurants" that operate in the federal capital.