Glasgow City Council's Planning Committee rejected an application by St Enoch Centre Investors and Caffe Nero to open a coffee house on the ground floor of the Buck's Head building at 63 Argyle Street.
Councillor Graeme Hendry, leader of the opposition SNP Group, said the decision could drive away future potential investment from the city.
He said: "Argyle Street is being strangled by the insistence of the council in enforcing planning guidance designed for the 70s rather than the current day.
"All successful shopping areas now require a mixed offer of retail and leisure so the refusal to allow even a simple coffee shop in this building does nothing to benefit our city. Instead, it runs the risk of driving away much needed investment in this area."
Glasgow City Council said the application was "contrary to planning polices".
A spokeswoman said: "We have rejected other advances in this area to turn retail units to other class uses such as fast food restaurants, hot food takeaways, bookmakers and pawnbrokers.
"These have been rejected as they are contrary to our planning policies which have been put in place to protect, maintain and grow the offering in our city centre.
"We will be reviewing our retail planning policies in the coming months to ensure that we maintain a strong retail heart in the centre of Glasgow, which is the best retail offering outside of London."