Watch | Peppermill Inn evacuated after fire

Shepparton police Acting Sergeant Nathan Trimby said the fire was not being treated as suspicious at this stage.

“Everyone was evacuated from the building ... there’s no damage to the hotel itself, and they evacuated it pretty well,” he said.

Peppermill Inn manager Todd van Kerkhof said he did not know how the fire began.

“It’s been through upstairs but we don’t know exactly what happened or how it happened,” he said.

Mr van Kerkhof said staff members did not realise the fire had started until they saw smoke billowing out of the upstairs window.

Patron Mal Jones, who is from Melbourne and came to Shepparton for a funeral, said he had met with some others at the Peppermill for a drink.

“Then one of the staff came in and said ‘everyone out’, and as we went to take our drinks out into the back she said ‘this is not a drill, get out’, and someone else said the place was on fire,” Mr Jones said.

“As we were walking out we could smell smoke.

“There wasn’t any panic, and the staff all did the right thing.”