Consumers ‘going local’ and shying away from Melbourne and Sydney CBDs for dining and socialising

The research, compiled from millions of transactions across the Square platform and a nationally representative consumer survey, has found consumers are increasingly choosing their local communities over city centres.

Square says the transactional insights focus on Sydney and Melbourne provides “a clear lens” into broader national trends that the CBD is no longer the main economic drawcard of Australia's major cities.

The data also reveals that the pandemic may have been a crucial turning point as restricted mobility led to a fall in traffic across CBDs, while traffic in non-CBDs grew.

In Sydney, non-CBD transaction volume grew 75.3 per cent between 2019 and 2020 while the CBD fell 3.9 per cent. In Melbourne, non-CBD areas rose 34.2 per cent while the CBD dropped 38.9 percent.

The research says consumer sentiment mirrors this as only 9 per cent of respondents feel more connected to the CBD than five years ago, while 54 per cent feel more connected to neighbourhoods.

Two in five visit the CBD less than once a month, and almost one in five avoid it altogether.

The trend has continued into 2025, with suburbs now showing stronger weekend dining traffic, higher loyalty and greater spend than CBD counterparts.

In the first half of 2025, suburban venues peaked on weekends, recorded higher average transaction values, and attracted more repeat customers than city businesses.

Square says that as more Australians work from home, the suburbs have become the centres of daily life.

ABS data shows over a third, or 36 per cent, of Australians worked from home regularly in 2024, reinforcing the role of local cafés, pubs and restaurants as the new hubs of connection.

Australians are also becoming more loyal to their neighbourhood favourites.

In Sydney, 4.5 per cent of neighbourhood customers made three or more repeat purchases in the first half of 2025, compared to 4 per cent in the CBD. In Melbourne, the gap was 4.6 per cent in non-CBDs versus 3.8 per cent in the CBD.

While these differences may look small, Square says they are a clear signal of a growing trend, namely that loyalty is shifting away from city centres and towards local businesses.

“The sellers building the strongest businesses today are those investing in long-term, local relationships,” says Colin Birney, head of business development at Square in Australia.

“You become part of people’s weekly rhythm when you are their go-to barista, baker or neighbourhood favourite.

“Data can play a big role in that too, helping businesses better understand their customers and deliver experiences that keep people coming back. That is how repeat custom and loyalty are built.”

Square says the survey data reinforces the trend. Australians say they now spend 73 per cent of their monthly dining budget in local venues, compared to 27 per cent in the CBD.

Neighbourhood spots are described as more homely (76 per cent) and more community-minded (70 per cent).

Square transaction data shows suburban food and beverage sales peak on weekends, while CBD venues peak at weekday lunchtimes, highlighting the difference between leisure in the suburbs and transactional visits in the city.

The preference for local life extends well beyond dining. Consumers overwhelmingly frequent their neighbourhoods for everyday activities such as  time with friends and family (87 per cent), meeting at cafés (75 per cent), shopping with friends or a partner (66 per cent), and going to the cinema (64 per cent).

Some suburbs are emerging as clear leaders with The Basin, Parkville, Keilor Downs ranked among the areas with the highest concentration of repeat customers in Melbourne.

In Sydney, Avalon, Dee Why, and Willoughby stood out. By contrast, Potts Point and Surry Hills, which sit close to the CBD but outside its core, recorded some of the lowest proportions of repeat customers, while Melbourne’s CBD itself also fell behind surrounding suburbs.