More than 30 diners had to be evacuated after fire broke out in the roof space of the restaurant.
Scampering Fire crews took several hours to bring the blaze under control and police closed roads around the scene.
A worker at the KFC in Broadstairs, Kent, said: "The squirrels have been living up on the roof for a while. They seem to like it here.
"You see them most days scampering around."
Assistant manager Chandiran Sandanan added: "The only thing that could have caused the fire really was the electrical box in the roof space.
"It's sad to see it burning down - I've worked here for six years and it's very successful. I hope they rebuild it."
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Written by Daily Record - Glasgow