Annual Square Research Indicates Year of Experimentation and Customer Focus for Restaurants to Combat Economic Headwinds

January 30, 2025 at 08:00 AM EST

Square’s fifth annual report finds that global consumer businesses, including beauty and retail, plan to invest in new automation and loyalty programs in 2025

Square, the technology company that makes commerce and financial services easy and accessible, today released early insights from its forthcoming annual Future of Commerce report, providing a unique look at the restaurant, retail, and beauty industries across the US, Canada, UK, and Australia.

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Square’s fifth annual report finds that global consumer businesses, including restaurants, beauty, and retail, plan to invest in new automation and loyalty programs in 2025 (Photo: Square)

The research found that businesses worldwide – particularly restaurants – intend to experiment more in 2025, especially with customer retention programs like loyalty, as they face the triple challenge of sustained high inflation, shrinking consumer wallets and the need to raise prices across the board. These experiments, largely rooted in technology solutions, will be focused on increasing their efficiency while also deepening their customer relationships.

Square seller Gioia’s Deli in St. Louis, MO, for example, has been able to lean into enhancing their hospitality by paying attention to real-time and technology-enabled sales data. Alex Donley, Gioia’s co-owner, said, “Now, instead of having a meeting about our gross sales, we’re getting more granular with these reports. We know that last February we sold this amount of hot salami, and this February we sold this amount. What’s the difference? What did we do wrong? Or what did we do right? It makes us a more efficient business, which ultimately makes the customer experience better.”

Connecting with the consumer through loyalty programs and better customer data is a key focus for operators – more than seven in ten restaurant leaders (71%) are planning to increase investment in their loyalty or reward programs to keep customers close over the next 12 months. This reflects the positive impact loyalty programs have on driving revenue, with 83% of restaurant leaders saying their loyalty program successfully drives up order or basket size, as well as repeat visits (82%) and return on investment (78%). Consumers are happy to be part of the in-crowd at their favorite restaurants – 69% find loyalty programs to be valuable, and they’re reaping the benefits with 43% of businesses having implemented exclusive discounts for their members.

These developments are more important than ever as businesses are fighting for a share of consumers’ wallets – most consumers (63%) said they’re cutting back on restaurant spending. As they grapple with rising costs across their supply chain, 71% of restaurants plan to increase prices this year. Yet despite these challenges, businesses are feeling positive, with 78% of restaurant leaders saying they’re more optimistic about their business than a year ago. Nearly two-thirds (65%) say they plan to increase their number of locations in 2025, and 74% plan to expand their menu offerings, leaning into new experiences and experimentation to power their growth.

As businesses seek routes to greater efficiency while still maintaining hospitality, Square’s research shows that 85% of restaurant leaders plan to invest in technology, such as new AI and automation tools, to help improve their companies this year. Three-quarters of them (75%) are spending more time on business operations compared to a year ago as costs rise and industry challenges continue. Two-thirds of restaurant leaders believe AI or automation will improve their business in each of the 15 areas we asked about, the most popular of which are marketing and promotions (77%), inventory management (77%), payments (76%), menu optimization (76%), and staff management (75%).

“In 2025, restaurants are walking the fine line between automation and hospitality,” said Ming-Tai Huh, Head of Food & Beverage at Square. “As businesses continue to face economic pressures, we’re seeing them invest in growth and experimentation as they find new, streamlined ways to work and deliver exceptional customer service – particularly through using time-saving and experience-enhancing technology.”

In addition to its data on restaurant businesses, Square’s Future of Commerce report also looked at the beauty and retail sectors:

Beauty businesses are relying on technology to save time, better focus on customers and improve the one-to-one service they provide.
- Customers appreciate and expect personalized experiences from the beauty salons and spas they patronize. More than half (55%) of consumers said they purchase products or adopt practices their beauty specialist recommends, showing how beauty businesses can expand revenues beyond their core service offerings.
Retailers’ priority for the year ahead is to better meld the physical and digital together, at a time when consumers increasingly crave in-store experiences powered by seamless technology.
- 78% of retail leaders believe in-store experiences like product demos or classes are critical for business growth, and about a third (35%) think they should offer more in-store events to keep up with the competition. One sign of retailers’ growth plans for 2025 is that 68% of them say they will invest in an online store over the next 12 months.

The full analysis of the top restaurant, beauty, and retail trends for 2025, industry data and insights from Square experts, and real-life examples from Square sellers will be available in the forthcoming report published on February 4^th 2025. For access, visit the Square website or reach out to press@squareup.com.

About Future of Commerce

The Square Future of Commerce survey was conducted by Bredin. The survey included both business owners and consumers. We surveyed 6,000 owners and managers of businesses in three industries: Beauty, Retail, and Restaurant. The businesses were located in the U.S., Canada, U.K., and Australia, with 500 respondents per industry per country. The business owner survey was conducted online and fielded via a third-party panel provider between September 18 and October 8, 2024. We also surveyed 4,000 consumers: 1,000 each in the U.S., Canada, U.K., and Australia. The consumer survey was conducted online and fielded via a third-party panel provider between September 20 and October 4, 2024. All respondents had to be 18 years old or older, and companies had to have at least one employee and have revenue above $20,000 or the equivalent in their local currencies.

About Square

Square makes commerce and financial services easy and accessible with its integrated ecosystem of commerce solutions. Square offers purpose-built software to run complex restaurant, retail, and professional services operations, versatile e-commerce tools, embedded financial services and banking products, buy now, pay later functionality through Afterpay, staff management and payroll capabilities, and much more – all of which work together to save sellers time and effort. Millions of sellers across the globe trust Square to power their business and help them thrive in the economy. For more information, visit www.squareup.com.