An inspection team comprising police officers and authorities of Ward 25 imposed the fine after finding 26 customers in the 40-square-meter restaurant on Ung Van Khiem Street on Wednesday evening.
Groups of four to seven customers were found sitting close to one another and several waiters not wearing masks.
Its manager, Tran Anh Tuan, said there were only 20 customers in the beginning, but then more come, and "it got out of control."
On Tuesday and Wednesday alone five street eateries and coffee shops in the ward were fined VND15-30 million each for flouting Covid prevention rules.
Tran Thanh Nam, vice chairman of the ward, said two patrol teams are sent out every evening to monitor compliance of rules.
The inspectors videograph violations for evidence, and "if any facility repeats a violation, we will impose higher fines and even recommend that the district authorities should cancel their business license."
To curb Covid, HCMC has ordered all street eateries and coffee shops to only serve takeout.
Bigger restaurants that employ more than 10 staff can serve 20 customers at a time with proper distancing between groups.
The city has also banned gatherings of more than 20 people outside of offices, hospitals and schools and all events with more than 30 participants.
A month into the latest Covid wave, HCMC has had eight cases, seven of them diagnosed in the last 10 days.
On Thursday morning the city announced that at least 25 people linked to a religious mission in Go Vap District, including a chef at the five-star Sheraton Saigon Hotel, have tested positive.
Of them 19 are members of the Revival Ekklesia Mission, which describes itself as a Christian congregation and a non-denominational, evangelical, charismatic church.
Six others have been in contact with the infected people.
But the 25 have yet to be confirmed as Covid patients by the Health Ministry.