Cinemas and visitor attractions like museums and galleries are also allowed to reopen in the latest round of lockdown easing.
Wales' latest reopening is similar to that of last summer, but this time with a vaccination programme in place.
Foreign travel is permitted to a small number of countries, although the Welsh government has advised against it.
After three lockdowns and the vaccination programme roll-out, Wales has seen a significant fall in Covid cases in recent months.
But newly re-appointed First Minister Mark Drakeford said the Welsh government will maintain its cautious approach to lockdown easing, as concerns rise about a variant of coronavirus from India.
Ministers had considered relaxing lockdown restrictions further on Monday, but Mr Drakeford said officials had "decided to hold back" for more advice on the variant.
From Monday, Wales will adopt the "traffic-light" system, allowing the resumption of international travel.
But the first minister warned it was "best avoided" because of concerns travellers could carry Covid with them.
Mr Drakeford said: "Thanks to everyone's hard work and ongoing efforts, we can take another step towards relaxing the coronavirus restrictions and move to alert level 2 on Monday.
"Indoor hospitality will be able to reopen, a move that will be welcomed by many of us as we look forward to enjoying a drink, a meal and the company of friends and family in a café or pub.
"By sticking with the rules and our successful vaccine programme, we are making really good progress in controlling the virus and keeping rates low.
"But the pandemic isn't over - the new, so-called Indian variant of concern is another unwanted twist in this pandemic, which we are monitoring closely."