Casey Linklater announced last month Station Cafe, which employs 11 staff, had been asked to vacate its premises after a new owner bought the building, which is at the northern end of the town centre.
Ms Linklater did not have a secure lease.
"I'm definitely, definitely gutted, because it's a huge chunk of my life," she said.
She opened her business on November 17, 2014, when she was 21 years old and over the years it had grown thanks to local support, but also because of strong custom from travellers passing through Palmerston.
She had to be out by October 25 and with no definite plans, the chattels were headed for a shed "at the moment".
Bernie Sugrue, who has bought the building, told the Otago Daily Times he had been approached by the building's previous owner in February and it had taken six months to complete the deal.
Mr Sugrue, whose Timaru-based Bernie's Bakery HQ owns four cafes, including Palmerston's McGregors Tearooms in Ronaldsay St (State Highway 1), said he approached Ms Linklater and her staff and offered them roles in a new cafe he planned to open in the space by Christmas.
But after receiving no reply after three weeks, he went ahead with his own plans.
After Station Cafe announced it was closing, online criticism mounted. He was "shocked" by the negative feedback, he said.
"I really like Palmerston. I'm getting a real bad rap at the moment, I really am, and I'm not retaliating at the moment - people are allowed their opinion.
"I appreciate there are going to be some people who think I am a bad person for what I have done.
"I didn't actually sit down and think too much on the other side. I got offered an opportunity and I took it. It's not like I'm a fly-by-nighter in Palmerston. I have invested heavily in commercial property in Palmerston, and I want to continue to make sure that I can beautify a lot of the buildings that I have got."
He noted that as the criticism mounted Ms Linklater had stayed out of it. In fact her behaviour had been "fantastic", he said.
Ms Linklater said she had learned a "harsh lesson" and was still looking for a silver lining, but she worried about her staff and the community reaction had got "really messy".
"I've learned a lot. I don't think it's jaded me, but I've definitely ... had too much of a positive outlook on everything and ... always saw the best in people. I've just learned to cross your t's and dot your i's."
