Perhaps, but "Not every restaurant likes children", does seem like proper english and it fits with Duolingo's translation of jedes as "every"

Same here.

Since jedes can mean "every" or "any", according to DL, I'd chalk it up to a weird translation error. Not correct in English, though, you're right, but it's about context.

And yeah, "Nicht alle Restaurants mögen Kinder." would be yours, which changes it a bit. Same meaning, but different wording.

Well, kids is plural, so wouldn't your phrase need mögen, instead of mag?

As Alturrang, above, states, that would mean the use of "alle", instead of "jedes". The meaning is not much different. Imagine having to teach english to a German and you used the phrase: not every restaurant likes children. Would you accept the translation "nicht alle..." and if yes, wouldn't that confuse your student with regards to the meaning of "every"? What about if the phrase was "Not all restaurants...". Would you consider "Nicht jedes..." as acceptable?