Traders lost thousands of pounds of bank holiday business as sewage flooded on to a busy promenade.
Owners and managers of businesses either side of the Palace Pier in Brighton watched in despair as tourists turned away in disgust.
Some restaurateurs had to move their outside tables while parts of the seafront were cordoned off.
Paul Ktorides, manager of the Beach Cafe takeaway, said: "We keep having to move our tables as the sewage gets closer and closer and is running by people's feet.
"We have had customers coming in but then saying they do not want their food because of the smell. People look at us like it is our food that smells. It is really bad. How can we sell food with this going on?
"This should be one of the busiest days but I would say we will be about £1,000 down on last year by the end of today."
Peter Avey, owner of Seasiders restaurant, said: "A lot of people are complaining about the smell. We have been trying to play it down and have not wanted to tell people it is sewage.
"Normally we would be full and have people queueing but instead it is so quiet. I am very annoyed. Bank holiday weekends provide our bread and butter. If we lose money we can never make it up."
Steve Wright, owner of the Jump Zone, said: "We usually have long queues but today there has been no one waiting. It is such a shame. This should be our busiest and best day."
Steve Smith, of Brighton Deckchairs, said his trade was suffering.
Jacqueline Kenny, who travelled down from London for the day, said: "The smell is so horrible. We thought we would sit on the beach for something to eat but we cannot because the smell is so bad. It makes you feel sick."
Richard Bath, 24, from Deal, added: "The smell is awful. We have no choice but to go to another part of the beach."
The sewage began flowing from a door under the pier on Sunday evening but the root of the problem was not known.
A pier spokeswoman denied the sewage was its responsibility.
Southern Water said it was investigating. A spokesman said that the promenade where the sewage was found was not its responsibility but confirmed that a manhole on the roundabout at the Old Steine was blocked.
The company was not sure whether this would have led to the problem on the promenade.
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