Year of innovation and experimentation ahead for Canadian restaurant businesses as they navigate continued economic headwinds

Jan 30, 2025

Square research finds that consumer businesses, including retailers and beauty brands, plan to invest in new technology 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.

The research found that businesses worldwide – particularly restaurants – intend to turn to innovative, tailored technology in 2025, as they face the triple challenge of sustained high inflation, shrinking consumer wallets and the need to raise prices across the board. These tech solutions will be focused on increasing their efficiency while also deepening their customer relationships.

Toronto restaurant Sunnyside Grill, for example, has successfully avoided raising prices while keeping customers coming back for brunch and lunch. “We’ve been using Square since 2021, and with food costs remaining high, having a technology partner that simplifies our operations has become more critical than ever. Square has been especially helpful in managing fluctuating staffing needs over the past several years. It allows us to easily track labour costs, ensuring the restaurant stays appropriately staffed and our customers remain satisfied,” said owner Melanie Jackson.

As Canadian businesses seek routes to greater efficiency, Square’s research shows that 89% of restaurant leaders plan to invest in technology to help improve their companies this year. More than three-quarters of them (79%) 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 (80%), inventory management (81%), payments (80%), menu optimization (81%), and vendor management (81%).

While introducing automation is a key focus for Canadian operators, so is connecting with the consumer – more than seven in ten restaurant leaders (72%) 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 (79%). A further 75% of them are planning to experiment in 2025 with new services and non-core offerings, such as in-store events, subscriptions, memberships and merchandise.

These developments come at a time when businesses are fighting for a share of consumers’ wallets – most consumers (62%) said they’re cutting back on restaurant spending. As they grapple with rising costs across their supply chain, 69% of Canadian restaurants plan to increase prices this year. Yet despite these challenges, businesses are feeling positive, with 77% of restaurant leaders saying they’re more optimistic about their business than a year ago. More than two-thirds (71%) say they plan to increase their number of locations in 2025 and 75% plan to expand their menu offering.

“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. The majority of consumers in Canada (68%) 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.
  • 71% 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 64% 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, 2025. For access, visit the Square website or reach out to press@squareup.com.

About the 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.