An Australian teenager is in hospital with burns suffered when a popular Bali restaurant was destroyed by fire.

Hundreds of shocked witnesses said they had just minutes to flee Chez Gado Gado restaurant as fire spread quickly through the iconic beachfront building’s thatched roof in Seminyak on Sunday night.

WATCH THE VIDEO ABOVE: Australian teen injured in Bali restaurant fire

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Indonesian authorities say the blaze was sparked just after 7.30pm by party balloons that supposedly contained flammable gasses and were taken to the venue for a birthday celebration.

7NEWS has been told the boy from WA’s South West is receiving care for burns to his face and arms.

It is understood he was very close to where balloons exploded.

“We saw the balloons explode,” Tash Welburn said.

“There was a bit of a panic because I think people thought maybe a bomb or something like that had gone.”

The Department of Foreign Affairs and Trade says it is aware and will offer consular assistance to the boy if it is needed.

An Australian teenager is in hospital with burns to his face and arms suffered when a popular Bali restaurant was destroyed by fire. Credit: 7NEWS

Witnesses said the fire took hold in the roof in about 20 seconds.

“All of a sudden the smoke got really thick and people started panicking,” Perth man Chadd McElroy said.

He said not every guest could move to safety.

“I said (to one person) ‘mate, you’re going to have to move because there could be some gas explosions’ and he said ‘I can’t, I can’t walk, I’m in a wheelchair’,” McElroy said.

“So I helped pick him up and drag him another 20 or 30 metres down the beach.”

Chez Gado Gado restaurant went up in flames on Sunday night. Credit: 7NEWS

Heath Nelson said there “was a thousand people on the beach”.

“Everyone was just in shock, didn’t know what to do. People were running around, they’ve lost relatives, yelling peoples’ names. It was pretty horrific to see,” he said.

Dozens of firefighters did what they could from the ground but the much-loved venue could not be saved.