Lonestar on Division Street opened shortly after restrictions were eased on July 4.
But despite obtaining a pavement licence, four small tables were not enough to offset social distancing restrictions inside.
It left the business ‘unviable’ and it closed again after just four weeks.
Part of Division Street was closed during lockdown to promote social distancing and ‘active travel’.
Copper Pot, a rival on that section, has a “competitive advantage” from tables spread across the road, a spokesman for Lonestar owner Brook Leisure said. A similar traffic ban could have kept them open too.
He added: “You only have to look at what’s happened further up the road to see that it has worked. It would have had a major positive impact for us.
“We didn’t get our bit of the road closed. We did get a pavement licence but we only had a few spaces outside.”
Division Street also has problems with drug addicts, he added. Banning traffic could transform it.
“There is a problem with drug addicts, something is drawing them there. Pedestrianise all of Division Street and that might eradicate the problem.”
Some 15 staff are furloughed but the site has continuing costs including rent and bills, he added.
Lonestar opened a year ago in the former Fopp record shop and business was “okay” in a challenging market and improving.
It faced intense competition from a string of rivals, including 200 Degrees, Copper Pot, Steam Yard, Tamper and Ink and Water.
It obtained an alcohol licence and opened in the evening to stand out.
But it was hit by a lack of office workers due to the pandemic, the spokesman said.
Thousands of staff at large organisations nearby, including Sheffield City Council, HSBC and Grant Thornton, are still largely working at home.
The Great Gatsby bar and Pizza Express, also on Division Street, have also closed.
Sheffield City Council shut several city centre roads to traffic to improve active travel and social distancing.
In June, Coun Bob Johnson, cabinet member for transport, said they would be in place “until we start moving out of lockdown.”
He added then: “I might like to make them permanent, particularly Division Street, depending on feedback.”
Today, the authority is considering whether more sections of Division Street could be ‘re-prioritised for pedestrians’.
Coun Johnson said: “Division Street remains closed between Rockingham Street and Westfield Terrace to provide additional space for people to socially distance. This has also had the benefit of allowing parts of the road to accommodate outdoor seating, which the council has supported by providing café barriers.
“We’re continuing to monitor the scheme and at present, whilst there is an ongoing need for social distancing, we have no intention to reopen the street to vehicles.
“As part of supporting the ongoing redevelopment of the city, some changes to the existing closure may be required as existing access arrangements become affected by construction works, but we will communicate these as details are confirmed."As part of any changes we will be considering whether further sections of Division Street could also be re-prioritised for pedestrians on a temporary basis, whilst also maintaining key routes across it required for buses and servicing.”
On David Walsh’s LinkedIn page, there was majority support for pedestrianising the road.
Shehla Ali, social media trainer, Richard Pilgrim, SYPTE marketing manager, Tom Scott, founder at Little Mesters and IT professional Rich Davies were all in favour.
Ceris Morris, deputy director of campaigns and alumni relations, said: “Absolutely - it's mad that you can drive down there.”
And David Cross, director at Sky-House Co, added: “Yes and more. Should be resurfaced with a bike lane and lots more planting, seating and awnings. Go for it.”
But business owner Martin Wallis-Keyworth disagreed.
He said: “No - it should be from 6pm onward on weekdays and all weekends - a blanket ban, given all the other restrictions in the city centre, is ridiculous.”
Jen Hadfield, designer at Evoluted New Media Ltd, said: “Blue badge holders need to park close to things, so closing off roads can exclude people who need access.”
And Dave Atkin said: “Is the centre of Sheffield an area available to all Sheffield residents - allowing access to facilities and venues while residents and businesses have free movement into, through and across the area - essential given the city’s geography, or an extended university campus designed purely for the entertainment and leisure of a tiny (in comparison to the population) elite of faculty, students and city centre residents? Because if the answer is b) the city has lost its way.
“Adding in the restrictions at Kelham, the division between the pretentious lifestyle obsessed and the rest of the city will only widen.”
Meanwhile, there is a lively debate about whether Sharrowvale should be traffic banned after Dan Kirby called for the measures on Twitter.
He said: “Streetfood Chef, Pom Kitchen and Porterbrook Deli would massively benefit from something like this and make the area much nicer to be in.”
Porter Pizza Co responded: “Would love to see this happen! Every time the Sharrowvale market is on I hear people saying, ‘wouldn’t it be lovely if Sharrow Vale Road was always like this?’”