Chico's Restaurant owner Grant Murphy said yesterday his head chef, who he declined to name, noticed the fire on an external balcony at the rear of the restaurant about 9.45pm.
After alerting the restaurant manager - who evacuated the one table of diners remaining and notified the neighbouring Captain's Restaurant - the chef then attempted to bring a flaming stack of plastic vegetable crates under control with four fire extinguishers, assisted by staff from neighbouring premises Bardeaux and Searle Lane and Social.
He was later taken to Lakes District Hospital and treated for smoke inhalation but released yesterday, Mr Murphy said.
Queenstown Fire Service station officer Dion Halmshaw said when officers arrived the fire had already been ''knocked down'' by two chefs using dry-powder extinguishers.
''The two chefs did a real good job.''
Two officers wearing breathing apparatus and using a low-pressure hose extinguished the fire and pulled the area apart in an unsuccessful attempt to find the cause, he said.
Fire investigator Mike Cahill, of Invercargill, said the cause was still ''undetermined''.
However, the outcome could have been disastrous.
''Grant's staff told him the flames were up to the roof.
''Once they [the plastic crates] start burning, they create a fair height of flame.
''They're actually very, very lucky,'' Mr Cahill said.
The crates were destroyed and there was some damage to a freezer the crates were next to as well as damage to an external light.
However, had the wooden eves above the balcony caught fire ''it would have gone straight through into the roof space''.
''Given the age of the building, they are very lucky it wasn't destroyed.''
The premises are insured.
