Costa Coffee has abandoned plans for a new outlet in the small market town of Totnes after local independent traders launched a campaign against it.
Totnes in Devon is famous for its wide range of locally-owned shops and already has 41 independent coffee shops.
Traders were concerned when Costa was granted planning permission to open a branch on the High Street by South Hams District Council in August.
A campaign group called No To Costa was formed and 5,700 people signed a petition against the development.
Costa has now caved in to local pressure and abandoned the plans in recognition of the "long and proud history of independent retailers" in Totnes.
In an open letter, the chain's managing director Chris Rogers said he "recognised the strength of feeling in Totnes against national brands".
Costa announced plans to move in after wholefoods business Greenlife moved out of the building on Totnes High Street in February 2010.
It planned to open a 70-seat cafe and the District Council approved them by 17 votes to six on August 1 this year.
The No to Costa campaign formed three months ago and 5,700 people signed a petition against the plans.
One leading campaigner, Martin Turner, said he was "flabbergasted" by the "good sense" the multi-national firm had shown.
The manager and owner of Tangerine Tree Cafe said: "We are delighted. We took steps to up our game and we were prepared to compete with them.
"But we are an independent town and we don't want a clone high street.
"People come to Totnes because of the independent coffee shops and stores striving to do different things.
"The money we spend is spent on local suppliers and what we earn is spent locally so it keeps the town self-sustaining.
"With a corporate company the money would go to shareholders outside the area."
Another campaigner, Tony Kershaw, owner of the town's La Fourchette Brasserie, said: "We're happy with the decision Costa has made.
"Totnes, as most people know, is pretty independent and different as a town, and we're seeking to protect that."
In a show of unity, Costa managing director Chris Rogers jointly signed an open letter to the townsfolk informing them of his decision to withdraw.
It was also signed by Totnes MP Dr Sarah Wollaston and Mayor of Totnes, Councillor Pruw Boswell.
It read: "Totnes is a town with a long and proud history of independent retailers.
"It has one of the lowest percentages of branded stores of any town of its size in the UK, very few empty shop fronts, as well as a very high proportion of places selling coffee.
"At its heart Costa cares about what customers want and seeks to be a force for good in communities in which it operates."
Mrs Boswell said she was "euphoric" and that it was a "fight worth entering".
She said: "I have to pay tribute to Costa because they took the trouble to come down and look at the town.
"Their coffee shops have their place but it's not down here. The community really came together on this one."
Another Say No campaigner, Ian Gregory, said he understood Costa had signed a 10-year lease for the vacant building prior to its U-turn.
Mr Gregory, joint-owner of Fat Lemons Cafe, said: "It's surprising that they've made the decision after everything seemed to be set.
"I've never heard of a big company like Costa doing anything like this before."
The firm currently has 19 stores in Devon and employs nearly 200 people.
It has more than 1,390 shops across the UK, and another 800 internationally.
Earlier this month, the coffee shop chain, which is owned by the Whitbread group, reported its 42nd consecutive quarter of growth, with profits of £36.1m.