The state-run TASMAC liquor outlet was also situated near a bus stand and close to a temple, the protesters said.
The protesters, including women, said there was no proper response from the administration on their petitions seeking closure of the outlet.
As traffic got disrupted, senior district officials, including from TASMAC, rushed to the spot and assured them that the question of either shifting or closing the shop, would be taken up with authorities.
Following the assurance, the residents dispersed, police said.