The bar first opened in December 2007 and closed months later. Mr Hennessy bought the bar in 2008 and has run it since, with Hennessy's on Tutanekai St.
"It was a continual challenge for five years. Everyone that knows me knows how hard I have worked at it," he said. "It's just one of those unfortunate situations."
Mr Hennessy said he was disappointed for his loyal staff, the customers that had enjoyed The Shed and also on a personal level.
"It's always disappointing when you don't quite achieve what you set out to do."
Mr Hennessy said the bar had been poorly designed, with the front entrance on busy Amohau St working against it. Although intended as a pub for the Rotorua Central Mall, that never worked as the door faced the other way.
He said attempts to move the entrance to the side, along with other changes that would have made for a more "viable and vibrant" business had been repeatedly stifled.
"Continual attacks from compliance and regulatory people made it very difficult."
It was a shame for Rotorua as The Shed had always tried to do things other bars didn't, he said.
"[I want to] thank all the loyal people that supported The Shed."
