The explosion at the two-storey establishment sparked discussion on Chinese social media about the safety of barbecue restaurants, which have gained new popularity this year with the lifting of zero-Covid curbs and hype among online influencers.
Seven people were still undergoing treatment for burns and cuts from broken glass after the blast, which was triggered by a leaking liquefied petroleum gas tank at the restaurant, Xinhua reported.
The explosion prompted President Xi Jinping to order a safety overhaul across China, calling on all regions to rectify safety risks and "hidden dangers".
"All barbecue shops in the country should be shut down and rectified," a Chinese social media user wrote on the popular Twitter-like microblog Weibo.
"Profits should not be earned with the blood of the people."
The restaurant in Yinchuan, capital of Ningxia and a tourist hub in the region, is well-known locally with a loyal following, according to media reports. The blast happened during peak dining hours, with high school students and retirees said to be among the dead.
The explosion happened on the eve of a holiday long weekend as millions of tourists geared up to hit the road during the Dragon Boat Festival that started on Thursday.
Accidents due to gas and chemical blasts are not uncommon in China, despite years of efforts to improve safety.
In 2021, a gas explosion at a barbecue restaurant in the northeastern city of Shenyang killed four and wounded 47, with the powerful blast destroying the shop's facade and shattering the windows of nearby buildings.
"I've a night market on my doorstep, and every time I smell burning things, I'd look around quickly," said a social media user named Liu Xiaoqiao, a store owner who recently installed a gas leakage alarm.
"Besides the gas canisters in my store, gas tanks line the road outside - scary. I hope everyone will stay vigilant."