Plans to demolish an Italian restaurant and replace it with five houses have been refused.
Councillors voted against the proposal to knock down the Miaitalia restaurant on Bye-pass Road in Bolton-le-Sands.
They agreed with Lancaster City Council planning officers that a more "robust and transparent marketing exercise" needed to take place to show "that the retention of the existing use is no longer economically viable or feasible".
"There are reasons why that site will always struggle, and even more so now, post-Covid, as a food business," said Mr Waddington.
"Bolton-le-Sands is a fantastic village to live in and the council are crying out for people to build houses in the area.
"If I thought there was trade to be had, I would have continued as a restaurant."
Mr Waddington is pressing ahead with plans to relocate the award-winning Miaitalia to Queen Street in Morecambe.
Lancaster City Council planning regulatory committee voted to refuse the planning application by a majority, during a meeting on Monday afternoon at Morecambe Town Hall.
Councillors Paul Anderton and Vicky Boyd-Power abstained, and Councillor Peter Yates voted against the refusal. All other councillors present, voted in favour of the recommendation.
"It is a fact, it does not work as a restaurant," said Councillor Yates.
Councillor Keith Budden, chair of the planning committee, was not involved in the discussions or the vote, having declared an interest as Mr Waddington is his son-in-law.
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