The Short Version
The core claim is substantiated by multiple credible news sources. A Kerala restaurant widely identified as "Mehr Mandi & Grills" (colloquially shortened to "Hotel Mehr" in the claim) did circulate a Vishu promotional poster depicting baby Krishna alongside a non-vegetarian kuzhi manthi dish, leading to arrests and a public apology. The restaurant's exact name is slightly simplified in the claim, and the establishment attributed the poster to an outsourced designer's error — but the promotional material was nonetheless publicly circulated under the restaurant's name.