The May bank holiday weekend saw the Kubz Tipi Bar set up in Mandela Gardens, on Hanson Street, which organisers say brought in 3,000 visitors.
But venue owners have concerns over the organisation of the event - which has been confirmed to be returning for four days from Thursday.
Dave Clayton, who runs Soho Music Institute, said: “It’s a little bit insensitive to set up a rival company down the road from somewhere that’s been closed for 12 months, that’s got to trade sub-profitably to get around the Covid arrangements.
“We don’t want people not to have fun and we know we have no divine right to customers.
“It’s not evil - it’s just not very well thought out, done by people with no grasp of the town centre economy.”
Paul McNicholas, of Annie Murray’s, 00 Bar and Hill 16, added: “We should be notified about what’s going on - there was an initial shock as nobody knew about it.
“When the Glass Works is built, there are going to be more of these kinds of events.
“They do bring people into town, but the worry is it could adversely affect pubs.”
Covid marshals reportedly paid visits to venues in the Victorian Arcade, and told Paul he couldn’t seat patrons under its glass canopy as it was deemed ‘enclosed’.
“It’s 30 feet in the air,” he said.
“At the side of us, there was a canopy not much higher than you can put your hand in the air.”
Organiser Maria Farrugia said the event ‘used local suppliers for as much as we could’ and that many punters said they were heading elsewhere once they’d visited the tipi.
“Kubz Tipi Bar is a Barnsley company which is run by Barnsley born and bred entrepreneur, Brett Jackson,” said Maria of York-based House Events, who organised the event alongside Garden Weddings Yorkshire.
“We are very keen for our space to be used beyond the bar and get involved in community projects or be used for additional town centre seating, and are trying to talk to individuals about how we can make this happen.”
Matt Gladstone, executive director for place, said Barnsley Council was constantly looking at ways to ‘keep the spend within the borough’ and encouraged suggestions.