A pair of moped drivers burst into a cafe and threatened customers after they were told not to drive through a low traffic neighbourhood zone.
A dozen police officers scrambled to the scene at 10.40am on Sunday.
The two men had initially tried to drive through an LTN zone which was boxed off by planters by Calton Avenue when they were told off by a customer.
Frightened pedestrians and children sought refuge inside the shop when the drivers began shouting and making threats.
The drivers then pushed their way inside and ushered everybody to the back of the shop, with one threatening he had a carving knife.
Cafe director Roger Wilkinson, 66, was fixing some panels outside when he saw the nightmare unfold.
“It was ten minutes of absolute sheer terror,” he told the Evening Standard.
“In the middle of Dulwich on a Sunday morning, you just do not expect that.
“It all started with the LTN zone. A man was sat there with a coffee reading the paper and I saw two people on bikes swearing and shouting at him.
“He had obviously tried to stop them going in the zone between the two sets of planters. He told them they were out of order and they couldn't do it.”
Mr Wilkinson warned the drivers to “back off and go the long way round” when they turned on him and hurled more verbal abuse.
He continued: “One of them was riding around, kicking things, knocking cables over, and moving people out the way.
“Then he picked up the chairs outside the cafe and threw them at the window. Luckily they are laminated glass and they just bounced off.
“For about a minute, they pushed their way in and I thought they were going to rummage the till and smash the place up. They said ‘everybody to the back of the shop.’
“We had a 16-year-old working there, he was frightened with the children.
“The taller one appeared to headbutt one of the customers who might have just dodged out the way.”
Officers arrived within minutes but the men had fled the scene. It was said one man had his foot run over when they drove off.
Mr Wilkinson described the two men as white, “hyper” in their behaviour and “out for violence.”
There is wide opposition to the LTNs with vandalism to the planters a regular occurence, according to the cafe director.
“It has been a running battle for a year, but this is the nearest this has come to essentially ABH. It was just horrendous,” he said.
Metropolitan Police confirmed officers were called to reports of two men acting aggressively in Calton Avenue on October 10.
A spokesperson said: "It was reported that the men had smashed a window of commercial premises and assaulted one person. One man suffered minor injuries.
“Officers attended and carried out a thorough search of the area. There was no trace of the suspects. Enquiries to locate them are ongoing.”