Greggs has revealed a 19% slide in profits after admitting it lost ground to supermarkets and coffee shops in the £6 billion food-on-the-go market.
The bakery chain, which has more than 1,650 shops in the UK, posted underlying profits of £41.3 million after a dismal first half of 2013 caused sales for the year to be 0.8% lower on a like-for-like basis.
Chief executive Roger Whiteside said conditions were likely to remain challenging this year but that he has been encouraged by recent trading after underlying sales rose 2.1% against last January's snow-hit period.
He is increasing the focus of the business on food-on-the-go, which accounts for 75% of customer visits, rather than traditional take-home business.
The company admits it has underperformed the food-on-the-go market as convenience stores, coffee shops and fast food operators better met customer demands, particularly in traditional shopping centre locations.
Greggs responded by completing 216 shop refurbishments last year, with a similar number due under the food-on-the-go format in 2014. It expects to open 60-80 new shops and close a similar number of shops this year.
More than two-thirds of its new shops have been opened in locations away from high streets such as retail and industrial parks and motorway service stations.
Mr Whiteside said: "With online shopping set to change customer patterns over the long term we expect to reduce our exposure to locations where footfall is declining and increase our presence in travel, leisure and work-centred catchments."
It introduced a new pizza product that has become one of its fastest selling lines, as well as a range of 'heat to eat' sandwiches. In savouries it said it improved the fillings in its best-selling lines such as Steak Bakes.
Cost inflation has shown signs of easing recently but as previously stated Greggs said the costs of investing in its turnaround programme was likely to constrain profit growth over the next two years.