Recent findings from Square’s 2026 Local Economy Report reveal that consumers continue to prioritize affordability in their choice of local businesses, presenting a crucial insight for small business owners navigating the competitive landscape. With 65% of customers indicating that affordable prices drive their loyalty, balancing cost and memorable experiences has never been more vital. This trend highlights a clear path for operators at every pricing level: deliver perceived value while enhancing the overall customer experience.
The report indicates that 59% of consumers frequent quick-service restaurants (QSRs) several times a week, underscoring the importance of frequent patronage for local businesses. "Value-conscious consumers still want to feel something when they walk through the door," highlights the report. The top reasons for repeat visits are high-quality products (54%) and friendly, reliable service (44%). Additionally, a staggering 56% of customers say knowledgeable staff make a local business truly memorable.
As small business owners focus on these aspects, they have an actionable opportunity to create loyal customer bases. Notably, 72% of consumers are inclined to remain loyal to local businesses even in the face of price increases, provided those increases come with added value. This lends a significant vote of confidence to businesses that prioritize quality and service alongside competitive pricing strategies.
Beyond monetary transactions, the report emphasizes the importance of transforming casual visitors into regulars. Regular customers, defined as those visiting at least four times a year, generate six times more annual revenue than first-time visitors. The statistic is even more impressive in cities like Atlanta, where regulars produce seven times the revenue. Furthermore, regular customers tend to tip approximately 11% more than first-time patrons, driving overall revenue growth. In fact, Square’s data indicates that revenue from regular customers grew by 7.67% nationally in 2025, outpacing the overall revenue growth of 6.97%.
This focus on loyalty is timely; 24% of consumers plan to shop and dine locally more frequently throughout 2026. This anticipated growth provides a unique opportunity for food and beverage businesses that can make each visit feel personal and rewarding. Those who succeed in creating memorable experiences for their customers may well be the local favorites that thrive regardless of economic fluctuations.
Another notable trend is the increase in tipping rates. Across the food and beverage sector, average tip percentages have steadily climbed from 14.85% in Q3 2025 to nearly 15% in Q1 2026. Bars are leading this upward trend with tips averaging 17.30%. Full-service restaurants have also seen a rise, now at 14.82%, while cafés have rebounded to 14.52%. Quick-service restaurants (QSRs) have maintained a steady tipping average of 14.09%, indicating a broader consumer willingness to show appreciation for quality service.
These insights paint a hopeful picture for small business owners. "Consumers showing up right now are making intentional choices," according to the report. For businesses willing to meet those customer demands with engaging experiences, the current economic climate presents an array of opportunities rather than merely challenges.
This shift towards valuing experiences, alongside affordability, signals to operators the need for consistent investment in service quality and customer engagement strategies. Providing not just products but creating a journey for customers could solidify their role as community staples, contributing to a thriving local economy.
As Square continues to assist businesses in turning transactions into connections, it offers a suite of tools designed to help small businesses navigate these evolving consumer expectations. For more insight into the findings of the 2026 Local Economy Report, you can access the full report here.
By adopting these strategies, small business owners can not only survive but thrive in a landscape dominated by consumer expectations for value and experience.
