The Open Jar at Seaton Carew had promised to give away 2,000 of the cheesy chicken dishes if the Three Lions won the Euros.
Owner Joe Franks made the tongue-in-cheek offer at the start of the tournament.
But over the next four weeks it looked increasingly like he would end up £20,000 out of pocket as England progressed by beating Germany, Ukraine and Denmark in the knock-out stages to make it to the final.
Even though he will not have to fulfil the promise, Mr Franks admitted he would have preferred to see England lift the trophy after losing out to Italy on penalties.
He said: “I would rather have seen them win and given the Parmos away.
"We’re all football fans in the restaurant. I was more disappointed with the result than the Parmo deal.”
But as a consolation to fans, the restaurant has decided to give away one free per table this Thursday night.
Mr Franks added: “We’ve had lots of messages and interaction from people on social media who were excited that they could be getting a free Parmo.
"We feel bad and are thinking the right thing to do is give some away.”
The offer is limited to restaurant visitors only and each recipient must be accompanied by a paying adult.
The Open Jar closed for Sunday night’s final as it does not have a TV and also to allow hardworking staff to watch the big match.
"We have done it for several of the games,” said Mr Franks. “It was nice for the staff who have worked hard, particularly over the lockdown.”
The restaurant opened the doors of its new premises at Seaton Reach when the hospitality industry was allowed to open indoors again in May.
It was previously on Hartlepool Marina for a number of years before occupying the unit that used to be the Sheesh Mahal Indian restaurant.
Mr Franks added: “It’s going really well. We have changed our business model quite a lot in terms of what we offer and the feedback has been really good.”