The eaterie, named Mamma Mia! The Party, will recreate the Greek taverna setting used in the stage musical and 2008 film starring Meryl Streep and Amanda Seyfried.
Patrons of the restaurant will be welcomed by waiting staff who play characters from the musical and diners will be able to take part in the show during an evening of Greek food, music and performance.
Ulvaeus tells The New York Times, "I've been sitting in theatres around the globe since we started, and have experienced that happy mood in the audience, where people stand up in the aisles and dance and sing, and I hear constantly about women who gather and have Mamma Mia! Saturday nights... This is the next extension from that: transfer the mood to a restaurant - a Greek restaurant, of course - have a gigantic party, and tell a little story in real time."
The venue is set to open in January (16) inside the Grona Lund theme park in Stockholm, Sweden near the Abba Museum. Ulvaeus hopes to expand the project to other cities around the world if it is a success.
The news comes just days after it was announced the Broadway production of Mamma Mia! will close after 14 years in September (15).