The Italian government had called for the name to be changed following an investigation by La Repubblica newspaper, but its requests were rejected by the restaurant and Spanish authorities.
The Office of Brands and Design, part of the European Union's Office for Intellectual Property, has now reportedly accepted Italy's complaint about the use of 'mafia' in the brand name, forcing the eateries to change their name.
The news came from Italian farmers' organization Coldiretti on Thursday, which has campaigned for years against the use of the word 'mafia' in brand names.
"Unfortunately the case is not isolated, and all over the world from Mexico to Sharm El Sheikh, there are 'Cosa Nostra' restaurants and pizzerias," Coldiretti noted.
"The EU must now stop the commercial use of an infamous 'brand', which exploits stereotypes of mafia organizations, oversimplifying and almost normalizing it. This phenomenon has brought pain and grief throughout Italy," said Coldiretti's president, Roberto Moncalvo.
"Adding insult to injury, as well as the grave damage to image, this is also an economic exploitation of the 'Made in Italy' label. Counterfeiting and falsifying Italian food is an industry which has now exceeded €60 million and has cost Italy 300,000 jobs, according to a Coldiretti analysis."
'Lots of marketing, few scruples'
The La Mafia chain had been a rare success story during Spain's economic crisis, growing steadily since opening in 2000. Its full name is "La Mafia se sienta a la mesa" or ' The mafia sits at the table', and its restaurant features pictures and decor inspired by the Italian crime syndicate.
It already has 39 restaurants across Spain and is about to open two more in the Canary Islands.
One of Italy's top writers on organized crime, Attilio Bolzoni, visited two La Mafia eateries in Spain back in 2013, aiming to investigate the success of a business with "a lot of marketing and few scruples".
"In times of crisis, we are growing," the firm's public relations manager Pablo Martínez told the Italian journalist at the time."We didn't create the name, we just use it."
Martínez stressed that images of violence were prohibited in the firm's restaurants and that the model was the mafia of the movies, such as The Godfather.
"We apologize to those Italians who feel offended (by the name) but that's not our intention."
The article caused an immediate reaction in Italy.
Marco Anzaldi, an MP with Italy's Democratic Party, called for an official complaint to be lodged, and following an appeal from Sicilian MP Claudio Fava, whose own father was killed by Cosa Nostra, the Sicilian mafia, the Italian government requested that the controversially named Spanish eatery either change its name or be forced to close.
Italy's anti-mafia commission, the Italian Embassy in Madrid and Coldiretti backed the call.
The restaurant chain has yet to make a statement on the EU ruling.
In August 2013, a a Sicilian politician and anti-mafia commissioner lambasted restaurants in Denmark for naming pizzas and sandwiches after a notorious crime gang after stumbling across an Al Capone pizza in Copenhagen.
He said the dishes "exploited the worst stereotypes about southern Italy and criminals".
READ MORE: 'Europe needs to wake up to the mafia'