Firefighters were called to Albury’s Hogs Breath Cafe on Saturday night.
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Patrons were forced to clear out of the Townsend Street eatery after fire broke out about 8.30pm.
It is believed the fire started from an air conditioner.
The extent of the damage was still being determined.
Five fire trucks were called to the scene near Albury’s main street, Dean Street, on its busiest night of the week.
Police had cordoned off the street around the restaurant.
“Coming to the fire, we could see large plumes of black smoke,” Albury Civic Fire Brigade captain John Vandeven said.
“It did appear we had rather a large fire.
“Crews went in with breathing apparatus and were able to determine where the fire was, in the air conditioning duct, and were able to knock it down quickly.
“At the moment we are just doing a bit of salvage and overhaul, just to make sure we’ve got it all.
“There’s going to be a bit of smoke and water damage.”
Owner Kee Pike, who has been in charge of the restaurant for nine months, said the swift response of firefighters had kept damage to a minimum and anticipated the store would be back up and running “in no time”.
“These things happen unfortunately,” he said.
“Thankfully everyone was out safe.
“Everyone is fine, which is great.”