Shortly after the fire, Kiwi House tweeted : "We've had a rather large fire engulf the outdoor bbq area. Everyone is ok. We're closed till further notice. More updates as they happen."
New Zealander Louise Rae had been waiting in a queue to enter Kiwi House for half an hour when the fire started.
"People started coming out and we were joking they would have to go to the back of the queue ... then the flame grew visible [from over the top of the fence that surrounds the outdoor area] and that's when I called the fire brigade," she said.
Ms Rae said the flames continued to grow higher and the police pushed the crowd back before there was an explosion.
"Probably about five minutes after it had all started there was another massive explosion - that's when everyone started to panic."
She said there were "massive flames - a mass of black smoke everywhere".
Ms Rae said Kiwi House has been popular with expats, although she hadn't managed to go there herself.
"I'm a New Zealander, but I've had my British colleagues telling me about it and saying I should go down there," she said.
"The barbecue smelt really good."
As the initial shock of the fire started to ease, people started speaking more lightly about the event which destroyed the heart of New Zealand celebrations.
One witness told 3 News: "My girlfriend came in and she was like, 'Move out of the way, move out of the way, there's a gas bottle on fire!' And I was like, 'Well, I need to get me card, and I want to get some sauce for my pie."
On Twitter Ross (@Captain - RossT) joked: "Not to be outdone by Aus gold medal count NZ house has decided to step in and show the world how to BBQ Kiwi style!"
James Elliott (@JamesElliott8) also took a crack at the fire: "The instruction as I recall it was to always blow on the pie not blow up the pie. #kiwihouse".
