Under step three of the state government's roadmap out of COVID-19 restrictions, hospitality businesses will be able to operate under predominantly outdoor seated service. Group limits of 10 and density limits will apply.

Some business owners have lauded the changes as a much-needed "light at the end of the tunnel" while others say the plan is too slow.

Images Restaurant manager Stacey Mark said more capability to have outdoor service would be welcomed.

She said Liebig Street could operate under a similar setup to the city's Wunta Festival where the street is closed to traffic and tables could be set up on the road.

"If Liebig Street could get cut off and we could utilise the space out the front I'm sure that would help us and restaurants like Bojangles and the Whalers," she said.

"It would be amazing, a lot of restaurants would benefit from the outside space."

Warrnambool City mayor Tony Herbert encouraged the businesses to put that suggestion to council.

He said if reports were correct that regional Victoria could skip a stage and open up it would add confidence to the CBD.

"I think it's just the most wonderful opportunity for us to come alive, especially leading up to summer," he said.

"Our operators are used to it anyway, they would completely embrace it."

Cr Herbert said Warrnambool's cafe and hospitality scene was very strong and gave the feel of the CBD a positive vibe.

Warrnambool council has already waived fees for cafes and restaurants for outdoor dining, as has Moyne Shire Council and Southern Grampians Shire Council.

Corangamite Shire Council is waiving outdoor dining fees but businesses still need a permit.

Hotel Warrnambool owner manager Steve Philpot said outdoor service would hinder his business further.

"It's not going to solve the problem, it just means we'll be having to spend money on outdoor furniture, umbrellas and wind breaks," he said.

"And the density of people, how many will we be allowed to have?

"We should be able to open with no restrictions, we've got one case not 500, it's the worst case scenario roadmap.

"We should be able to operate the local economy, have everyone opened up and no-one allowed to travel to keep it all local.

"People are going broke, we need to open up the local economy."

Meanwhile Simon's Waterfront manager Rose Morgan said the restaurant was just a week or two away from getting its 'dining bubbles' which they had made overseas.

"They were made overseas and should reach the dock next week," she said.

"It will work in our favour because we can make use of our beer garden and deck.

"Everyone seems excited for them, it's something a little different."

She said the restrictions had been tough on business.

"On a day like today we would have been full inside and out, instead we're selling 10 takeaway coffees and no meals," she said on Thursday.

Premier Daniel Andrews has flagged an overhaul of council fees and permits when it comes to outdoor table service for pubs, cafes and restaurants.

He said things like curbside parking, footpaths and even nearby parks could be potentially used for outdoor dining to help businesses work within the step three rules.

"You'll hear more about that quite soon, I can't give an exact day, but dining will be predominantly outside with some inside seating and use of toilets," he said.

"We want to try and get people in the safest environments possible, mainly outdoors, subject to industry consultations in regional Victoria.

"I'm not having a go at local government but there are rules that make that hard so we're going to get rid of those rules to make it much easier to help publicans and restaurateurs to make the shift.

"If New York and London can do it why can't we? When we can provide that update we will."

Ms Mark said Images Restaurant had been closed for five months of this year, a huge blow for the business.

"We've had five months closed and five months open at this stage, that's not something we wanted to say, that 2020 was a write off," she said.

"Hospitality was one of the first hit and one of the last ones to reopen. Beauty, hospitality and tourism are the major three industries out here and turn over a huge amount of money for the local economy.

"Not being able to open has been a huge thing especially being the generation I am, I'm 26, and our generation is going to have to go through a recession.

"This is something I'm going to have to deal with later on in life, at retirement age."

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