Australia’s restaurant landscape is undergoing a fundamental transformation, with suburban dining venues significantly outperforming their CBD counterparts in terms of customer loyalty, average spend, and weekend traffic, according to new research from Square.
The payment platform’s analysis of millions of transactions across Sydney and Melbourne reveals that Australians now allocate 73% of their monthly dining budget to local neighbourhood venues, compared to just 27% in CBD locations.
Key performance indicators favour suburbs
The data shows suburban restaurants are building stronger businesses across multiple metrics:
Customer Loyalty: Sydney neighbourhood venues recorded 4.5% of customers making three or more repeat purchases in the first half of 2025, compared to 4.0% in the CBD. Melbourne saw an even wider gap, with 4.6% loyalty in suburbs versus 3.8% in the city centre.
Average Spend: Melbourne suburban food and beverage venues averaged $15.15 per transaction compared to $13.53 in the CBD. Sydney showed similar patterns with $14.52 in suburbs versus $12.87 in the CBD.
Traffic Patterns: Suburban venues peak on weekends when customers have more time for leisurely dining, while CBD restaurants remain dependent on weekday lunch traffic from office workers.
The pandemic catalyst
The shift accelerated dramatically during the pandemic. Sydney’s non-CBD transaction volume surged 75.3% between 2019 and 2020, while CBD volumes fell 3.9%. Melbourne saw non-CBD areas rise 34.2% as the CBD dropped 38.9%.
With over a third of Australians now working from home regularly, local cafés, pubs and restaurants have become the new social hubs, replacing the traditional role of CBD venues.
Implications for restaurant operators
“The sellers building the strongest businesses today are those investing in long-term, local relationships,” said Colin Birney, Head of Business Development at Square Australia. “You become part of people’s weekly rhythm when you are their go-to barista, baker or neighbourhood favourite.”
The research suggests suburban dining experiences are more intentional and higher-value, with customers viewing neighbourhood spots as more homely (76%) and community-minded (70%) than city venues.
Regional winners
Top-performing suburban areas for repeat customers include The Basin, Parkville, and Keilor Downs in Melbourne, and Avalon, Dee Why, and Willoughby in Sydney. Notably, even traditionally popular inner-city areas like Potts Point and Surry Hills recorded lower repeat customer rates than outer suburbs.
For restaurant operators, the data signals a clear opportunity: success increasingly lies in becoming an integral part of local community life rather than competing for transient city traffic.
