Mexican police have arrested two waiters who allegedly beat the grandson of late US civil rights activist Malcolm X to death in a bar after he disputed a $1,200 tab, prosecutors said Monday.

Mexico City's top prosecutor, Rodolfo Fernando Rios Garza, said authorities were looking for two more suspects in the death of Malcolm Shabazz, 29, who was found lying on the street in front of The Palace Club on Thursday.

Shabazz, who had a troubled youth and spent time in detention for setting the fire that killed his grandmother, died later in hospital of blunt-force trauma, with head injuries, a broken jaw and fractured ribs.

The victim and a friend had been accosted on the street by two women aged 20 and 25 who convinced them to go to the bar, Rios Garza said.

He said the pair consumed alcohol and at around 3:00 am "two waiters along with two other subjects" demanded they pay an excessively high $1,200 bill.

"The victims did not agree with the amount and after failing to reach an agreement, the now deceased was beaten and his companion was threatened and stripped of his belongings inside the building," Rios Garza told reporters.

There is no evidence Shabazz was attacked because he was black, he said.

He later told local radio that Shabazz was beaten with fists and may have also been kicked and bludgeoned with a bat or a stick.

The prosecutor named the suspects as David Hernandez Cruz and Manuel Alejandro Perez de Jesus. They face robbery and homicide charges.

Authorities want to question the two women and the bar owner. Prosecutors said the bar's three surveillance cameras were turned to face a wall and that all recordings had disappeared.

The club is located across the street from Plaza Garibaldi, a famous square known for roving Mariachi bands and seedy dive bars, but Rios Garza stressed that The Palace Club is not a tourist spot.

An AFP reporter who visited the scene found decrepit building with the door to the bar signaled by a single neon sign. Local media reported the premises doubled as a strip joint, but neighbors described it as a karaoke bar.

Officials did not name the friend who was with Shabazz but local media identified him as Miguel Suarez, a leader of a labor movement.

Rios Garza said he did not know why the friend was spared but noted that they were separated in different rooms during the attack. The two men had arrived in Mexico City from Tijuana, a city at the US border.

Shabazz spent time in a juvenile detention center for starting the fire that led to the death of his grandmother Betty Shabazz, the widow of Malcolm X, in 1997. The civil rights leader was assassinated in 1965.