Janette Currah from Sassparella cafe and David Waddington from Miogelato gelateria said the council should do more to help small businesses in the town centre.
This came after both fell foul of laws which prevent shopkeepers from putting tables and chairs outside their premises unless they pay £282 for an annual licence.
But Lancaster City Council said they have actually made it easier for small businesses to run street cafes.
Mr Waddington, co-owner of the new Italian ice cream shop on Queen Street, said: “Following a recent visit from council officers, we stopped putting out our four chairs and two tables directly outside the shop.
“I accept that a street licence is required, but why is it a near £300 fixed fee?
“Some flexibility based on space and potential covers would probably see many more businesses paying for a licence to have outside furniture, which in turn is a better advert for our shopping streets. It would help benefit the look and atmosphere and further benefit the shopkeepers of Morecambe.”
Mrs Currah, whose vintage cafe is on Euston Road, said: “I’d had three tables and two chairs on each outside for a couple of months. They looked nice, they brightened the street up.
“We’ve got an empty shop next to us and Home Bargains empty opposite. That’s been hard for me. I used to get a lot of custom from them.
“So I was trying to attract people in, make it look inviting. But the council came and told me I had to pay for a licence – £282. They also said I had to wait (28) days in case somebody objects. So I’m not paying for a licence this year. I’ll have to pay it next year.
“£282 for a year isn’t a lot but even so it doesn’t help. The council is not small business-friendly.”
A council spokesmansaid they wanted “to encourage opportunities for street concessions and café culture to make for a lively town centre”.
He also said elsewhere in the county, anyone wanting to run a street cafe has to get planning permission as well as a licence. But he said Lancaster City Council has “streamlined this process” by ensuring that only a licence is required in some parts of Morecambe town centre.
“Street cafes must share the public realm with many users - shoppers, residents and other businesses and both councils have a duty to ensure that they are attractive, well managed and maintained with the necessary public liability insurance in place to ensure high operational standards of appearance, cleanliness and safety,” he said.