Scarborough and Filey appliances are responding to the blaze which started at Hanover Road Fish and Chips earlier in the afternoon.
An eye-witness said windows were smashed and smoke was coming out. The inside looked blackened.
The road is currently cordoned off at both ends by police. There are big tailbacks of traffic on Victoria Road and the surrounding area.
Breathing apparatus and hose-reels are in use by the fire service and an aerial platform is also in attendance.
The fire is said to be under control.