Stuart Mawer and Matthew Sample applied for a premises licence from Scarborough Borough Council to open the Jam Jar at 47 Victoria Road.
The building was previously home to Van Ryans Express and is situated next door to the Spa pub.
On Tuesday, a council licensing sub-committee granted permission for them to open the premises from 8am until 11pm seven days a week, with alcohol being sold for consumption on and off the premises from 10.30am until 10.30pm.
The committee also laid down a condition that the premises shall operate as a restaurant/ bistro and not as a bar or vertical drinking establishment.
The councillors did not, however, agree to licence a seating area outside the premises as requested in the application.
The applicants have 21 days to appeal the decision.