Crews from Fairlie, Pleasant Point, Geraldine, Timaru and Washdykes have been sent to extinguish the blaze, which was reported on Main St around 2.10am.
The building was “well alight” when the first two fire trucks from Fairlie arrived and they quickly asked for extra resources, Fire and Emergency’s southern shift manager Lyn Crosson said.
The fire was contained around 3.30am but the crews were still working to totally extinguish the fire.
Geraldine chief fire officer Graeme Mould told NZME two shops had been damaged in the fire.
Franz Lieber, the owner of Fairlie Bakehouse, arrived at 3am to start work and fire crews were already there.
He said the fire had started at the fish and chip shop but spread to the building next door, which he believed was empty.
“Both of them are gutted … It was quite severe,” he said.
The smoke had filled the bakehouse initially but but only the smell of smoke remained.
Fire crews were still on the scene just before 7.30am.
Waka Kotahi NZTA said State Highway 8 was closed near the intersection of Talbot Rd.
As of 6am, there were still four fire engines and a tanker in attendance – however a crew from Fairlie had been called away to attend a nearby crash in which a vehicle had rolled on the Geraldine-Fairlie Highway, Crosson said.
“When we first arrived, there was one person still in the vehicle,” she said.
Just before 6.30am the person had been freed from their vehicle.
Police, ambulance and roading contractors had been advised.
Motorists were advised to be vigilant as the crash was on a corner on a windy road.