Panicked diners fled a Gisborne restaurant as a fire ripped through the bar next door.

The blaze, which began in a kitchen, engulfed the Wharf Bar and Cafe on Gisborne's waterfront at 8.15pm on Sunday.

Catlin Paterson was having dinner with her mother in the adjoining restaurant when she noticed smoke coming from across the wharf.

CAITLIN PATERSON Smoke pours form the Wharf Bar and Cafe.

"My mother and I were sitting at a table overlooking the wharf and we noticed smoke billowing past," she said.

"It quickly became obvious it was a fire and we all rushed out. Outside, it looked like a thick fog rolling in with all the smoke. We stuck around for a couple of minutes to make sure everyone was out but the smoke quickly forced us further away."

"I never saw any flames, just a lot of smoke."

Renae Gray The Wharf Bar and Cafe on Gisborne's waterfront is currently ablaze.

Paterson said the cafe where the fire broke out was closed at the time.

"No one was in there," she said.

Paterson said as the Lone Star restaurant was being evacuated there was a mood of panic.

"We started off moving quickly but relatively calmly. However, one of the staff members started shouting "get out, get out now! This is not a drill!" But he sounded panicked which caused panic among us. One little girl was terrified, trying to find her mum in the commotion."

"I was going to stick around just in case someone needed first aid but everyone seemed okay and the smoke was too intense."

A woman who was near the fire said it appeared under control a short time later.

"We didn't notice it to start with. It probably started more than hour ago," she said.

At about 10pm, central fire communications shift manager Jan Wills said the fire had been contained and firefighters were dampening down the site.

She was unsure how long it would take them to completely extinguish the blaze.

Wills said the fire began in a kitchen, but she was not sure if any of the three businesses in the two-storey building were open at the time.

"Nobody has said if the restaurant was open or not. It's still Christmas season so places do close down," she said.

Fire safety investigators were at the scene on Sunday night.