In its recent study, Square found that regular customers are foundational to the local small-business economy.
In a world of global e-commerce, the real economic powerhouse might actually be your favorite corner cafe. Square’s 2026 Local Economy Report has pulled back the curtain on a phenomenon called the “Neighborhood Network Effect,” proving that local businesses aren’t just neighbors—they are a high-functioning financial ecosystem.
Square found that a “regular” customer—defined as someone who visits at least four times a year—generates six times more revenue than a one-time shopper.
The Power of the “Regular”
Loyalty pays, and it pays well. According to Square’s analysis of millions of transactions through 2025, regulars are the undisputed backbone of neighborhood stability.
- Higher Tips: Regulars tip an average of 11% more than transient customers.
- Predictable Growth: While one-time “transient” spending declined recently, revenue from regulars grew by 7.67%.
- Routine Matters: 78% of beauty salon regulars and 59% of foodies buy the exact same thing every visit, providing businesses with much-needed inventory predictability.
“When regulars support one business, they’re often supporting five others in the same ZIP code,” says Nick Molnar, Global Head of Sales & Marketing at Block.
Your ZIP Code is a Web, Not a Map
The report reveals that businesses in the same neighborhood are literally “sharing” success. About 32% of regular customers are shared by multiple businesses in the same ZIP code.
This interconnectedness creates a measurable “lift” in revenue. When businesses are connected through these shared regulars, the financial impact is staggering:
Annual Revenue Lift Per Connection
| Los Angeles | $2,201 |
| San Francisco | $2,025 |
| New York | $1,500 |
| Chicago | $1,100 |
In San Francisco, this effect is most visible, with 67% of sellers being connected to other nearby businesses through these shared loyalists.
The “Connector” Businesses
Not all businesses play the same role in the network. Coffee shops and casual dining spots act as the primary “hubs.” They attract the daily foot traffic that eventually funnels into nearby retail boutiques, nail salons, and service providers.
Data from Cash App reinforces this “keep it local” trend, showing that up to 60 cents of every dollar spent at a local business stays circulating within that same neighborhood.
2026 Outlook: Resilience Through Connection
Despite rising costs, the American consumer is doubling down on their neighborhood. 75% of consumers plan to maintain or increase their local spending this year.
However, the “multi-stop” habit is becoming the new standard. 32% of shoppers say they almost always visit multiple local businesses in a single outing. For small business owners, the message for 2026 is clear: your neighbor’s success isn’t your competition, it’s your growth engine.
If you want to see a local economy thrive, look for the person ordering “the usual” at the coffee shop. They aren’t just buying a latte; they’re powering the entire block.
