Mid Sussex Council's licensing sub-committee has refused the bar's application to extend hours from 1.30 am on Fridays and Saturdays and also rejected a request to stay open to 2am on Thursday nights and 3am before Bank Holidays.
Bar boss Richard Podesta told the council in his application statement that longer hours would help Burgess Hill compete with Brighton and Haywards Heath in the night-time economy.
But councillors refused the application because they felt the later hours could cause disturbance to people living nearby.
Cllr Margaret Baker, who chaired the meeting on Friday November 21, said: "It was not a decision we took lightly. We did feel for them, particularly in this economic climate, but we had to balance that against the residents, who are entitled to their quality of life."
There is a right of appeal against the decision.