Karen’s Diner at Brighton Marina is due to close next week because its franchise has been ended after high drug readings taken by police.

The restaurant chain said today that it was terminating the franchise as police prepared to ask councillors to revoke the premises licence at a formal hearing.

As well as significant traces of drugs at the Marina branch, Sussex Police also found that the diner had broken various licensing and safety rules.

The force formally asked Brighton and Hove City Council to review the licence with a view to revoking it after The Argus exclusively revealed that a customer complained about a joke made about a child.

The restaurant was slammed for giving a nine-year-old child a hat saying that she “should have been a bl*w j*b”.

The Marina branch is due to cease trading on Monday – the day before a council licensing panel hearing.

A report prepared for the panel of three councillors said that the police raised safeguarding concerns after a high reading for cocaine was found on a baby-changing surface in the restaurant toilets.

During the licensing check, on Friday, February 2, officers found traces of cocaine, heroin, MDMA (ecstasy) and ketamine in the toilets, on the kitchen pass and reception and on a customer table.

Sergeant Vince Lam swabbed surfaces and said: “There are some very high readings and most alarmingly a (very high reading) for cocaine on the baby-changing table.

“During changing, the baby’s fingers could contact the surface where drugs have been consumed and (they could) then place their fingers in their mouth causing possible harm.”

Very high readings indicate that a surface has been in contact with “bulk amounts” of a drug – and these were also found for cocaine in two places in the men’s toilets, three places in the ladies and five places in the disabled toilet.

High recordings for cocaine, which indicate “measurable quantities” rather than mere cross-contamination, were found in the men’s toilets, the disabled toilets and in four places in the ladies.

A further “medium” reading for cocaine, which would indicate cross-contamination or historic contamination, was also found in the ladies’ toilet.

Low readings for cocaine, which suggest cross-contamination, background contamination or greatly degraded historic contamination, were found at the reception desk, bar card machine, a customer table and in the men’s toilets.

Low readings for heroin were found on the kitchen serving counter and the ladies’ toilet hand dryer. A medium reading for heroin was found on the ladies’ toilet bin.

A medium reading for ecstasy was also found on the ladies’ toilet bin and a low reading for ketamine on the cistern in one of the cubicles of the ladies’ toilets.

Several breaches of the premises licence were also found. Sergeant Lam said that staff did not know where the closed-circuit television (CCTV) hard drive was but assured officers it had been there a few days before.

PC Andre Bernascone went to the venue to check the CCTV on Saturday, February 3 and found the system had been removed.

The premises licence holder Lee Carter contacted PC Bernascone the next day and said that the CCTV was inherited from the previous operator and he did not know where the hard drive was stored.

The report also said that the designated premises supervisor, Thomas Rooney, who was formally responsible for alcohol sales, was not at the branch often enough.

East Sussex Fire and Rescue Service inspected the premises in December after a complaint and issued a formal notice identifying 14 areas of non-compliance with fire safety rules.

A follow-up inspection found “little effort” had been made to address the issues which included not having an adequate fire detection and warning system.

The existing fire detection and warning system was inadequately maintained, the kitchen was ill-equipped and emergency lighting and escape routes were not properly maintained.

The diner did not have an adequate fire safety policy and did not co-operate and co-ordinate appropriately with the Malmaison Hotel.

Karen’s Diner said: “Our restaurants are intended to offer outrageously funny experiences and never to cause offence.

“Clearly the restaurant has operated outside of our guidelines and this is unacceptable.

“We take this opportunity of thanking the thousands of people who have been brave enough to visit and we share their disappointment as we announce this closure.”

Premises licence holder Lee Carter said last night that the restaurant was not closing because of drug readings and he and Karen’s had “mutually agreed to end the franchise”. He said the restaurant would be reopening under a new name in the near future.

Karen’s Diner said that all bookings are a contract between customer and franchisee and all claims for refunds should be sent directly to the Brighton franchisee at karensdinerbrighton@gmail.com.

The licensing panel hearing is due to start at 10am on Tuesday 5 March. The meeting is scheduled to be webcast on the council’s website.