Paws and Pals Diner is an incremental management game. The player becomes the manager of a restaurant near the ocean that serves anthropomorphic animals. Their goals are to promote the diner to attract customers, provide food directly and with wait staff, set up an outdoor receptionist, collect payments, and perform interior and exterior upgrades.
As with most click-tap games, the player must repeatedly click or tap some buttons to perform tasks. They select a Promote button to draw customers to the diner. When a customer enters a room, they acknowledge the customer's food selection and collect the payment.
Using buttons on the left side, the player performs various upgrades for free or with coins. The Room button allows them to change the design of a room by upgrading or adding items. The Theme button allows them to buy a new boat near the dock, a balcony for the side of the building, a tips box and front desk on the dock, and different walls. With the Food button, they activate and level up food selections. With Staff, they employ waiters, a receptionist and a promoter. The staff turn the manual click-tap actions into automatic ones. The Guest button reveals different types of potential customers and their preferences.
Paws and Pals Diner doesn't allow the player to unlock new rooms until they've earned thousands of coins. Beyond meal sales, the player can collect coins by selecting round Meow Money Jars that float on the water past the diner and viewing videos. They can also claim coins after they achieve goals, open gift boxes, and spin a lucky wheel. Once the player unlocks a room, they can access a fishing area as well.