A panel has formally revoked the drinks licence for Karen’s Diner at Brighton Marina after police found high readings for drug traces.

The decision was made even after the franchise owner agreed to surrender the premises licence – as did another business operator at the site.

Sussex Police said that the operator of the diner had failed to hand over security camera footage after a serious crime was reported there and had breached other licensing rules.

And fire chiefs found a series of safety breaches which had not been rectified by the time they returned for a follow up inspection.

As a result, any future business taking over the restaurant unit will need to apply afresh for a licence to sell alcohol.

The force formally asked Brighton and Hove City Council to review the licence with a view to revoking it after The Argus exclusively revealed that a customer complained about a joke made about a child.

The restaurant was slammed for giving a nine-year-old child a hat saying that she “should have been a bl*w j*b”.

Then Sussex Police asked Brighton and Hove City Council to “review” the licence for Karen’s Diner, at Unit 3, Boardwalk Level, Waterfront, Brighton Marina, after significant traces of drugs were found there.

Police investigating a serious crime asked for footage from the closed-circuit television (CCTV) system last month but the footage was not provided and the CCTV system hard drive was removed, breaching the licence conditions.

East Sussex Fire and Rescue Service inspected the premises in December after a complaint.

The fire service issued a formal notice after identifying 14 areas of non-compliance with fire safety rules. There had not been addressed by last month.

A council licensing panel made up of three councillors – Julie Cattell, Emma Daniel and Tobias Sheard – agreed to revoke the premises licence after hearing from Sussex Police.

The former premises licence holder Lee Carter surrendered the licence before the hearing.

He had hoped to transfer the licence to a new licensee, Callum Velour, but he withdrew his application at the hearing.

Mr Carter’s representatives, Paul Roberts and Tom Rooney, acknowledged some management failings and did not oppose a revocation of the licence.

The council said: “The panel takes very seriously the evidence presented to it. The panel shares the police concerns about the way in which these premises have been managed.

“There have been serious breaches of the licence conditions especially that concerning the CCTV and its apparent deliberate removal after an alleged crime.

“The high drugs readings in a restaurant setting and the absence of the DPS (designated premises supervisor), who should have been in day-to-day control and ensuring the licence conditions were met, is of utmost concern as are the fire safety breaches.

“In the panel’s view, there have been serious management failings and an apparent blatant disregard for the licensing objectives, conditions and overall public and staff safety.”