Several abusive messages were written on the front of Tin Sing in High Street, Quarry Bank, overnight.
The graffiti, which was quickly removed by the council on Tuesday morning, included racist messages such as "f*** off home China scum" and "we don't want you here".
The vandals have been roundly criticised by the local community, with many residents condemning the behaviour and offering support to the takeaway which is currently closed.
Councillor Chris Barnett, who represents Quarry Bank on Dudley Council, said he was "absolutely furious".
"It was reported on the Facebook group, but I didn't even get chance to pick up the phone, Dudley Council were absolutely spot on this morning, I don't know if they just saw it on social media or what," Councillor Barnett said.
"But the evidence was collected beforehand and I have spoken to the police and they're taking it seriously.
"We'll submit the evidence and we're hoping to get CCTV too.
"I'm absolutely furious about it. I know the majority of Quarry Bank are not racist and have respect for this business.
"The business has been there for a very long time. The people who did this should remember this is a hate crime, and the CPS are extremely good at prosecuting them."
Police have confirmed they are treating incident as a hate crime.
Sam Cullinane posted pictures of the graffiti to a community Facebook group and said the messages had appeared overnight between Tuesday and Wednesday.
He said: "This is absolutely disgusting behaviour and is not the general population of Quarry Bank's views."
Neighbours were planning on covering up the graffiti before council workers arrived on Tuesday morning and some have now suggested giving the owners cards or children's drawings to show their support.
Dudley Council was praised for removing the graffiti so quickly.
Former council leader Pete Lowe tweeted saying: "Racist scum attacked one of our own last night. Thanks to quick actions by Dudley Council workers and councillors we painted over their sickening actions!
"Solidarity with all of our community! Unity is strength! No pasaran! Stay safe!"
Councillor Laura Taylor, cabinet member responsible for community safety said: “We will not tolerate racism in our borough. As soon as we were made aware of this vile and offensive graffiti we arranged for it to be immediately painted over.
"More than ever it is important that our communities are united during this incredibly challenging time for us as a nation. It is only through working together that we can help to tackle the spread of coronavirus.”
A spokesman for West Midlands Police said: "We are investigating a hate crime after racist graffiti was sprayed on the walls of a Chinese takeaway restaurant on the High Street in Quarry Bank, Dudley.
"CCTV enquiries are ongoing to determine when the graffiti appeared and the owner will be spoken to and appropriately safeguarded.
"We will not tolerate this kind of crime and will do all we can to find those responsible."