Kaikoura's mayor is seeking legal advice over whether an anti-Israeli sign in a local restaurant breaches bylaws.
The Strawberry Tree restaurant and bar has put up a sign saying Israelis are not welcome until the military offensive in Gaza ends.
Owner Shane Cavanagh, who worked as a photo journalist in the Middle East, says he is appalled at Israeli actions in the Gaza Strip.
Mr Cavanagh says he will not ask Israelis to leave, though they are not welcome.
He admits the move is bad for business and the sign has provoked criticism in the South Island town, but he says he just wants to make a point.
Kaikoura District Mayor Kevin Heays says he is seeking legal advice about whether the sign breaches bylaws and can be considered offensive.
Mr Heays says the sign has angered other businesses in the town and he has been visited by upset residents.
He says the presence of the sign has been reported on Israeli news sites and he is worried about the effect it will have on tourism to the district.
"In my view, it's ridiculous - it's probably a publicity stunt for his own bar, but it's certainly not a successful publicity stunt for our town.
"I know other businesses have seen the sign, complained, and put up signs of their own saying everybody is welcome in our place."
A Kaikoura police spokesperson says the bar's owner has been spoken to, and no decision about any further action will be made until legal advice is received.
Earlier this week, an Invercargill kebab seller refused to serve two Israeli women, prompting an investigation by the Human Rights Commission.