The Garrison District Ale House on Queen Street has to lay off 38 workers and close after a fire broke out around 10:15 p.m. on Friday.

About 30 firefighters were on the scene through the night.

Fire crews said no one was hurt. They deemed the fire under control at 6 a.m. on Saturday.

Doug Williams, co-owner, said one of his employees noticed a short circuit in a light.

There was a bit of smoke so they called the fire department.

Still, Williams said he didn't think much of it until firefighters arrived.

"One of them said, `No, you have to go stand on the other side of the street and this is serious.' And all of a sudden it hit home, and another fire truck shows up and the investigator show up and all of a sudden there's firefighters everywhere," he said.

Police said the fire started in the bathroom area of the bar in the wall shared with Picaroon's Brewtique next door. They said they are still investigating what caused the fire.

"When the fire's in the wall, you're chasing the fire. You have to be sure the fire's under control before you can say it's under control," said Platoon Capt. Ken Dickeson of the Fredericton Fire Department.

Another popular restaurant in the city, Isaac's Way, burned to the ground in October.

"Both of these establishments obviously have had a tremendous impact on the city in terms of their contribution to the community," said Fredericton Mayor Brad Woodside.

Lisa Wilby owns the Cedar Tree Cafe, two doors down from the Garrison. Her cafe suffered minor smoke damage but she hopes to reopen this weekend.

"My first thought was, 'Oh no, Fredericton is losing another restaurant and it's such a small town.' We can't really lose places to go because we don't have that many.' So that was, honestly, my first thought," she said.

Williams said he'll have to lay off his 38 employees, but he'll hire some of them for the cleaning and restoration.

He said he hopes to be open again within a few weeks.