Shoppers flock to suburban cafes as CBD spending drops

Suburban cafes and restaurants are becoming increasingly popular as flexible work patterns normalise and CBD office buildings remain vacant, with new data showing customers on average spending more on food and drinks locally compared with city centres.

In the first half of 2025, businesses in suburban Sydney and Melbourne recorded higher on average food and beverage spends per customer according to transaction data from payment terminal provider Square.

In Sydney, the average spend per transaction at cafes, restaurants and bars was $14.52 at suburban businesses, but just $12.87 in the CBD. For Melbourne, the average spend on food and drink transactions was $15.15 in suburban cafes, higher than the $13.53 average in the city centre.

The same data also showed that in CBDs there’s a reliance on a diverse range of ever-changing patrons, while in the suburbs, businesses are flourishing thanks to repeat customers.

In Sydney, businesses in suburbs such as Dee Why and Willoughby noted 22 per cent of customers had frequented and spent money at the shop three or more times in six months. In the city’s main CBD, that figure was 11 per cent, with the inner urban pockets of Chippendale and Pyrmont recording repeat customer rates of 12 and 9 per cent, respectively.

Meanwhile, in Melbourne, eateries and bars in suburbs such as Parkville and Keilor Downs saw 20 per cent of their clientele three or more times in the first half of 2025, much higher than the Melbourne CBD figure of 10 per cent or the Southbank rate of 11 per cent.

The Square data included survey findings, conducted in August on just over 1000 respondents, indicating Australians were actively choosing to spend more locally. On average, respondents said they chose to spend 73 per cent of their monthly dining budget at local venues, with 27 per cent in the CBD.

The survey also found that preferences for going out were gravitating towards suburban hubs, with two in five respondents saying they visited the CBD less than once a month, and almost one in five saying they avoided going into their city centre entirely.

“The sellers building the strongest businesses today are those investing in long-term, local relationships. You become part of people’s weekly rhythm when you are their go-to barista, baker or neighbourhood favourite,” said Colin Birney, Square’s head of business development in Australia.

The insights are broadly backed by movement data and business groups, which have said that rather than CBDs becoming ghost towns, the figures reflect the changing ways Australians are spending and engaging with their cities.

‘We continue to see strong movement into the city, particularly in the evenings and across the weekends.’

Scott Veenker, Committee for Melbourne chief executive.

Greater work from home flexibility has been identified as one key driver of consumer activity out of CBDs and towards suburban hubs.

This week, Elliott Rusanow, chief executive of Westfield operator Scentre Group, told The Australian Financial Review’s property summit that working from home had been a boon for shopping centres.

“When people say they’re working from home, they’re probably also doing other things because they might be productive for part of their time at home,” the Financial Review reported him as saying.

“People don’t want to stay at home all day long, and for some reason … they don’t want to go to the office. So if they don’t want to go to the office, guess where they’re going? It’s one of our places, and we’ve seen the benefit of that.”

The national CBD office vacancy rate increased slightly from 13.7 to 14.3 per cent in the six months to July, Property Council of Australia data shows, in part due to an increase in supply of premium modern office spaces, which are in demand from businesses looking to boost office attendance.

Melbourne had the nation’s highest CBD office vacancy rate at 17.9 per cent, with Sydney’s at 13.7 per cent.

Adding to this are the findings of an economic insights report from the City of Sydney, covering the 12 months to April, which found that while there was a small rise in average weekly spending in the council area, there was a considerable drop-off in how much young people – especially those in the early stages of their careers – were spending in urban areas.

It found 25- to 34-year-olds, the largest contributors to the city’s economy at 25 per cent, spent 2.2 per cent less on average each month in the year to April, down for the second straight year. Spending by 18- to 24-year-olds, and 35- to 44-year-olds, has also been declining over the past two years. This contrasted with those over 55 increasing their average spends within Sydney.

Matt Levinson, head of corporate affairs and culture policy at the Committee for Sydney, backed up this theory, saying city-shaping changes such as the extension of the Metro network and higher density development outside the CBD had allowed suburbs to flourish.

“We’ve always celebrated our local faves, and that’s only increased since COVID, but what’s interesting now is the way FOMO’s inspiring us to check out different parts of the city,” Levinson said. “Instead of heading into the city, more of us are checking out local faves in other parts of Sydney, whether it’s Harris Park’s curry houses or the brisket sandwiches in Crows Nest,” he said.

CBDs, however, are still attracting crowds, albeit in different ways.

While weekday public transport figures in Melbourne are yet to return to pre-COVID levels, foot traffic in the CBD at night was booming. Post-work retail spend in Melbourne’s CBD in the middle of last year was up 34 per cent on 2019 levels.

“We continue to see strong movement into the city, particularly in the evenings and across the weekends when people come in for sport, theatre, dining and cultural events,” said Scott Veenker, chief executive of the Committee for Melbourne.

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