Town riding always gives poorer mpg as you do more accelerating.
Gearing down will make it worse as you have made the bike have to rev higher for any given speed. On my standard geared K3 I consistently get 55mpg-60mpg. Given a good thrash it drops to 50mpg. 60 mpg gives a range of about 165 miles on my bike, 140 for 50mpg.
Paul.