Staff attempted to quell the blaze using a fire blanket but were unsuccessful and called emergency services.

Senior Sergeant Russell Tharle of Warrnambool police said smoke started billowing through the building and management immediately put an emergency management plan into place.

Three Country Fire Authority units attended the fire which was reported at 3.30pm and quickly brought under control less than 15 minutes later.

Senior Sergeant Tharle said traffic around the busy seaside area was banked up.

"It was bedlam. People in the area were coming down to make sure their kids were okay and those in town were coming down for a rubber-neck so it log-jammed the area."

Police were called to divert vehicles away from Pertobe Road at the Merri and Stanley street intersections for about an hour until the scene was declared safe.

Warrnambool City Council's municipal health inspector was called in to inspect the kiosk's food preparation area.

"Luckily it turned out that no one was injured," Senior Sergeant Tharle said.