A tavern in Palmerston North's suburb of Highbury became fully engulfed in flames on Saturday afternoon.
Video footage shows large clouds of black smoke pouring out of Cloverlea Tavern as customers and nearby residents crowded around to watch emergency services work to put out the fire.
Police and Fire and Emergency New Zealand (FENZ) are both in attendance.
"Crews are responding to a fire at a commercial building on Tremain Avenue in Palmerston North," a FENZ spokesperson told Newshub.
"There are currently eight crews in attendance, and they will remain at the scene well into the evening, working on fully extinguishing the fire and dampening hotspots."
Firefighters also worked to put out a power box on fire, which FENZ said was related to the incident.
"Fire investigators are at the scene and an investigation into the cause of the fire is underway," they said.
Police confirmed with Newshub they are in attendance to help control traffic and urge members of the public to avoid the area.
One local man told Newshub he was inside the tavern with a couple of his workmates when the fire alarm went off.
"It was around 2pm and me and the boys were having our beer and didn't think much of it at first," Ansley told Newshub.
"Then we turned around and saw the manager was freaking out and the black smoke was pouring out of the kitchen and going everywhere.
"There were about six of us on our table, four other guys, and then about five people in the pokies room, so in total there would've been around 20 of us inside," he said.
"There was just one manager on, I'm guessing because it's not busy. It was just him on the bar from what we could see and he was just running back and forth through the black smoke."
He said people inside quickly rushed to get out of the building once they saw how bad the smoke was getting.
"We just stood out the front at first because we didn't think it would be that bad, then the flames started coming through the roof," he said.
"We moved out to the roadside and saw that this fuse box was going crazy. There was just black smoke everywhere and it was all coming from the kitchen.
"We didn't get our food in the end; I'd say it's charcoal now," he laughed.
Ansley said he's hoping everyone inside managed to find their way out.
"It all smelt very toxic. It's an old building which is full of asbestos, so it smelt horrible."
He said once he got outside, he realised people were breathing in the smoke.
"Everyone was just standing on the roads in the way of the smoke and it was stupid. The police arrived and I said to them 'We need to get all of these people away because they are breathing in the asbestos'.
"It's just a tavern, but there's a Gull service station right across the road which is what scares me."
