Israel will sell its historic Lafayette restaurant for $15 million, the Israeli business news site Haaretz reported.
The move was first reported by the New York Times.
It comes after the Israel Land Authority (ILA) granted a request by the US to allow the company to open in Jerusalem and to expand its presence in the capital, Haaretz said.
Lafayette was established in 1846 by Jacobus Lyon, a French Jew, and was renamed to Lafayette Square after its first owner.
The eatery opened in 1967 and became the flagship of the Haifa Jewish district.
The restaurant served traditional Lebanese dishes such as lamb stew and grilled cheese, as well as a wide variety of French, American and Israeli fare.
Its owners had hoped to expand into Jerusalem, but the Israeli authorities blocked the plan.
The news came as Israel has struggled to retain its position as the world’s largest Jewish state, as a growing number of Israeli Jews abandon the country for the US.
In addition to the Lafayette sale, Haifa is also looking to acquire more restaurants in the city.
The US has been pushing Israel to open up more Israeli restaurants in Jerusalem, and in April the Israeli embassy in Washington granted a $10m loan to the company.
The Lila family, which owns the Lafayette restaurant and has been in the country since the 1950s, has been seeking to open a restaurant in the Jerusalem neighborhood since the early 1980s, Ha’aretz said, citing unnamed sources.
Israel’s Jewish community is the largest in the world, but it is also home to the largest Palestinian population in the West Bank.