By 6pm the emergency services confirmed that the culturally significant building, which was erected in 1889, had been completely destroyed.
Another building adjacent to the café was also in danger and it was unclear if it could be saved.
Some 25 firemen from Ronneby and Karlskrona were on the scene on Monady evening to fight the blaze, as smoke drifted towards the centre of the town. SOS Alarm urged residents nearby to stay indoors and keep windows closed.
Nobody was injured in the fire, which appears to have started in the kitchen area of the building.