Flames ripped through the front of the building and plumes of smoke rose into the night sky, as more than 30 firefighters tackled the blaze at the site on Wolverhampton Road, near New Cross Hospital.
The Nickelodeon pub and Cineworld multi-plex cinema on nearby Bentley Bridge were evacuated as a result of the blaze, which started at around 8pm, while visitors to New Cross Hospital were diverted away from the main entrance on Wednesfield Road.
Seven fire crews from around the region put a 200m cordon in place due to fears of gas cannisters exploding.
Customers were allowed to return to Bentley Bridge shortly before 10pm.
Kenyons was also targeted last Sunday.
Fire Control said it had received a total of 24 calls to report the incident.
West Midlands Police are treating the fire as a suspected arson attack and believe it may be linked to a fire at Kenyons the previous Sunday, March 8, during which offenders attempted to set fire to the garage but it failed to ignite.
DC Andrew Higgins, from Wolverhampton Investigation Team, said: "We are working with the Fire Service to determine the cause of the fire, which we believe was started deliberately, and to identify those responsible.
"Significant damage has been caused to the business premises and the fire also led to major disruption to the bars, restaurants, cinema and other entertainment venues at Bentley Bridge.
"We urge anyone with information to contact us as soon as possible to assist out investigation."
One eyewitness said: "There was a loud, house-shaking bang about eight-ish.
"I looked out the window and was shocked to see the flames towering over the garage."
The fires at Kenyons are not considered to be linked to previous arson attacks at St Alban's Primary School and Charter Care, in Wednesfield, last month.
Anyone with information should call Wolverhampton Investigation Team, by dialling 101 or speak to Crimestoppers anonymously on 0800 555 111.
Emergency services and those near the scene took to twitter to inform others of the blaze: