Best: Jazz clubs. No question about it.
Restaurants aren't necessarily bad to play in either. You just need to keep the volume low and avoid too complex or intense jazz. The minus is that you're not supposed to provide more than background music. (However, I'm partially of the opinion that if anyone want only background music, put on a CD instead).
In my town, there's a bar/restaurant that offers "street jazz" outside the restaurant once a week in the summer. Those are nice and very popular events and the concept has actually grown to a bigger attraction than what fits the venue which is rather small. Anyway, it's a very nice concept that the restaurant owners probably earn a lot of money on. The bands play for restaurant tickets and get some really nice free food every time, too.
