The Sam's Riverside restaurant in London's Hammersmith has been forced to remove its outdoor terrace by the council, which its owner said would see it lose thousands of pounds a week in trade.
It is understood that a small number of local residents petitioned for Hammersmith and Fulham council to have the 32-cover terrace taken down.
Use of the space had previously been granted to the restaurant through an annual licencing scheme, which had been in place since the start of lockdown.
The renewal date for this year's scheme was 21 November, but the restaurant was warned on 18 November that the renewal application would be turned down.
Sam Harrison, owner of what used to be the 132-cover restaurant, estimated that the sudden closure of part of the business would lead to roughly "£10,000-15,000 worth of lost trade a week" at a time he said restaurants were "on their knees".
The terrace, which Harrison said was like a "little Christmas grotto" and "hugely lucrative" in previous years, could host large Christmas parties and Sunday lunches.
Harrison is currently working through cancellations for terrace bookings with the team, which he said had left staff in tears "because they know that their hours are going to be cut".
He told The Caterer: "People are properly worried about this winter. The sad thing is I don't think the council [is]. We should be doing everything within reason to allow businesses to trade. People have not recovered from lockdown and if anything, it's getting worse.
"It is already the hardest trading I have ever known, and this will push my business and myself to the edge. At some point what will be the incentive for people to take the risk of running their own businesses and creating employment?"
The council issued its official refusal of full planning permission for the terrace on 25 November on two grounds.
It stated that the terrace is "unacceptable in the interests of visual amenity" and "constitutes an unneighbourly form of development" that would create increased noise and light pollution for nearby residents.
In response to the judgement, Harrison said: "Small businesses like mine don't have time to go to appeal. I'm working on the floor every single day; we're just fighting to survive.
"I hope to appeal but I've got to get through the winter first and I will appeal if I ever manage to get any form of contact with our local councillors or local MP. I have to feel that [the appeal is] actually going to be fair and it's not just going to be a process that's going to cost me time and money."
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