I can see why they thought they could insist, since you originally gave them the choice.
And now that they've changed their mind, they may think, don't you still want to please them? Don't they still get to pick? After all, it was their choice in the first place.
And then when you are waffling, you're indicating that it's not the -fact- of the change (and the logistical difficulties) but the choice of restaurant, and you gave them that control at the very beginning, so why are you being difficult now, they may think.
I do think they're sort of rude to try to control this now, but you did send them that message--that theirs is the only opinion that matters in terms of restaurants.
But I also think you're totally reasonable to say, "Sorry, it's too late, it will be too hard to make sure everybody gets the memo." And then simply cut-and-paste, and don't negotiate.
And in the future--do not allow them a choice. Don't -give- them this power, because then they think it's theirs (which is not actually an unreasonable thing to extrapolate from that, esp. give that he -is- one of the birthday people).
But you've learned, finally. So don't do that anymore. Don't view these as a negotiation anymore. You make plans, and you make them concrete plans, and then you offer the opportunity for others to join you ("We're going to Restaurant A, would you like to join us?") or you flat-out invite them (and if that's the case, make it clear it's you treating).