Residents from the flats above the restaurant spoke of their devastation as they watched firefighters battle with the blaze at their home.
Allan Tenant has been told by firefighters that his two cats which were trapped in the building, are unlikely to have survived.
The 54-year-old has lived in a flat two above for 11 years.
He said: “When I got back to the flat after walking into town I saw all the fire engines and knew what had happened.
“That is my home gone up in flames, I am going to be homeless.”
Allan said the building’s fire alarm had been going off intermittently from 8am this morning, leading him to assume the alarms were being tested until he could smell the smoke.
“The fire alarms had been going off and on since 8am but at around 11am I could smell smoke so I thought now is the time to get out.”
Allan’s two black and white cats, Fuzz and Growler are thought to have been in the building when the blaze took hold.
He said: “I was going to pick them up and I just panicked, I hope they are still there but the fire man said they won’t still be alive. They are my cats, they are my life.”
He added: “My clothes, my furniture, I am going to have nothing, I will have to start from fresh.”
“Luckily I have got insurance and I can stay at my partners tonight.”
The blaze was first reported to North Yorkshire Fire and Rescue at 11.30am but fire escalated this afternoon and flames reached the roof of the building.
Allan added: “I am surprised how much the fire grew, it’s going to be gutted. I have seen fires before but not like this.
“There was a fire a few years ago in the middle of the night and we all had to stand outside for three hours.
“They are beautiful flats and I am stood here watching my house burn to the ground, I have spent thousands on that flat.”
Allan’s neighbour 76-year-old Kathleen Smith said: “I came down stairs to see what was happening then I wasn’t allowed to go back up.
“That’s my home, what about my belongings? I have just gone out with what I had on me.”
Kathleen’s daughter Jo Clark, 55 said: “I came around the corner and saw all the smoke up the street and I realised that’s what all the people are looking at.”
Ms Clark added: “I have never seen a fire before, this must be the biggest in years.
“She only redecorated the place recently and now it has all gone.”
A hub has been set up at St Peter’s Church for displaced residents and Harrogate Borough Council are working to find temporary accommodation for those left with nowhere to go tonight.