The Warrnambool RSL has pleaded with the state government to ease COVID-19 restrictions on indoor dining.
The venue was forced to close its doors for the second time this year on August 5 due to the limit of 10 diners in each indoor space.
RSL secretary Bernie Farley said it was a hard yet necessary measure to take.
"We're in the same boat as probably many businesses across Victoria - it's not viable to operate an establishment of this side, given the restrictions," Mr Farley said.
Mr Farley said the location meant they were limited when it came to outdoor dining.
"We're looking at all options but outdoor dining is extremely limited, given our location," he said.
Mr Farley said the RSL was calling on the state government to allow eateries to introduce a four-square-metre rule.
"That would allow us to have 75 diners in three quite large rooms," he said.
Member for South West Coast Roma Britnell said there hadn't been an active case of coronavirus for weeks, but residents we remain under some of the tightest restrictions in the country.
"The Warrnambool RSL is like many other hospitality businesses across my electorate - they have ample space that would allow for people to be seated safely with social distancing, but the blanket cap on the allowable number of diners means there venues are largely empty," Ms Britnell said.
"We need a flexible approach that looks at each venues size and circumstances rather than a blanket approach."
Western Victoria MP Bev McArthur has written to Premier Daniel Andrews about the RSL's plight.
"The threat to the future of the Warrnambool RSL illustrates just how catastrophic the ongoing restrictions are," she said.
Mrs McArthur called on Mr Andrews to offer a solution to the RSL.
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