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There are so many great places to eat in Jerusalem, but if you are traveling with kids you need to make sure to choose your restaurant wisely. Many places welcome kids and even have coloring sheets and toys for kids. Jerusalem is a town where you can expect to see kids out for dinner at 5pm and as late as 10pm.
There are meat restaurants that serve "Al Haesh" (On the Grill) food with Middle Eastern salads. These places are high class fast food and many of them are welcoming of kids. The best part of these restaurants is the super fast service. Within 5 minutes of walking in the door you will have fresh pita and a selection of salads at your table. Talpiot is the best place to find these restaurants which include Tzidkiyahu, Avizi and Zion Hagadol.
There are also fun and delicious dairy restaurants that serve special kids menus and offer special perks. Luigi's in San Simon/Katamon has a large outdoor garden equipped with kids outdoor toys including a see saw, slide and little kitchen. This is an ideal spot for the kids to play while the adults eat. Pituim, in the German Colony offers kids their own menu which turns into a coloring book.