Fergburger gained approval for the project from the Queenstown Lakes District Council last July after offering to meet its estimated $100,000 cost.
The Shotover St business attracts long queues, often blocking the footpath for other pedestrians.
The project is intended to alleviate the congestion by removing three car parks and dividing the widened pavement into two lanes separated by seating. Steel barriers along the kerb will prevent people stepping on to the road.
Council communications manager Michele Poole said the project was originally meant to be completed before Christmas, but was deferred until after Easter when visitor numbers were lower.
Council chief engineer Ulrich Glasner told Mountain Scene in December the work would be deferred until April because there was no contractor available to do it before Christmas, and pavers could not be supplied in time.
While the work is under way, Fergburger staff would marshal customers to reduce the obstruction of foot traffic, Ms Poole said.
Work is expected to be completed by June 12.
