Customers were evacuated when fire broke out in Dannevirke's Black Stump Cafe early on Wednesday afternoon.
The fire was thought to have been caused by a fault in a clothes dryer.
Dannevirke Volunteer Fire Brigade was called to the fire at 1.20pm.
They extinguished the fire and removed the dryer from the laundry which was fire damaged.
Fire engines blocked one lane of the town's main street on the brigade's arrival.
Firefighters spent an hour at the scene and checked that the fire had not spread into the roof.
An electrician was called in to check the wiring.
Cafe owner Josie Chai said there were 10 or 12 diners in the cafe when the fire broke out.
All were escorted out on to the footpath.
She said damage was confined to the laundry but the kitchen and restaurant were not damaged and the cafe would reopen on Wednesday night.