Bakery chain Greggs is set to open until 2am on Thursday to Saturday nights at its flagship Leicester Square store after reaching an agreement with the council, bringing an end to its court battle.
It will be allowed to sell hot drinks and its signature sausage rolls and pasties after 11pm, but not items from its hot food menu, and it must have bouncers on the door.
The fast-food chain was set to appeal against the decision by Westminster City Council to refuse an extended licence, with a three-day hearing meant to start on Tuesday.
But the hearing was cancelled after the appeal was withdrawn.
Based on the merits of this case, Westminster have come to an agreement with Greggs that works for everyone
It comes as Greggs has been extending opening hours across its UK stores as it rolls out more hot evening meals including pizzas, chicken goujons and hot baguettes.
These items require special permissions from local authorities to be sold between 11pm and 5am.
Greggs said these products have been selling well as cheap meals remain "compelling" to consumers facing a cost-of-living squeeze.
The firm had hoped to have a 24-hour store in London's Leicester Square, opened in July last year, to serve hot food throughout the day and night.
But it was blocked by the council over concerns that the store would cause "late-night disturbances and antisocial behaviour".
Councillor Aicha Less, deputy leader of Westminster City Council, said: "Greggs had originally applied for a licence in Leicester Square to sell hot food and hot drinks for 24 hours, Mondays to Sundays.
"This was refused by Westminster's licensing sub-committee and Greggs appealed that decision.
"Based on the merits of this case, Westminster have come to an agreement with Greggs that works for everyone."
The branch can sell hot drinks and food that is baked elsewhere and reheated in stores, such as sausage rolls and pasties but it will be banned from selling items on its hot food menu after 11pm.
The agreement means it can stay open until midnight on Sunday to Wednesday, and until 2am on Thursday to Saturday.
It also must instal CCTV at the premises, have door supervisors and ensure litter is cleared outside the shop.
"We are pleased to continue to support local businesses and look forward to working with the company going forward," the council added.
Greggs' chief executive Roisin Currie told the Evening Standard it had reached a compromise with the council, and was working on what it can sell later into the evening.
"It's very positive and we've worked well together," she said.
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