Brothers Michael and Mark Hastie are fitting out premises in Roberts St, next to the new Ocho chocolate factory.
Michael launched Bay Road at the Otago Farmers' Market last year and has been producing batches of the spread from a commercial kitchen at the Musselburgh Baptist Church.
His aim was always to set up a small factory, and demand for the product had got to the stage where it justified having their own premises, he said.
The new space incorporated manufacturing, retail and a takeaway cafe and the peanuts would be roasted in an old coffee roaster, allowing visitors to see the process.
It was hoped it would open in the next six to eight weeks.
Bay Road was available at about a dozen local shops, along with one in Christchurch and two in Queenstown, and it also hoped to move into Southland.
Mr Hastie was delighted with the response by customers, saying they loved the ''local factor'' and the fact it was made fresh.
Moving to their own premises also meant they could work on different flavours.
At present, they were working with members of Columba College's Young Enterprise Scheme to develop an almond butter.
Mr Hastie said they did not want to increase production too rapidly.
They were happy to focus on the lower South Island, mainly Dunedin, for the foreseeable future.
The name Bay Road came from the road in Warrington on which Mr Hastie grew up.
