Ari Souliotis bought his first two Dunkin’ restaurants in Vermont during the worst economic downturn in decades. With the Great Recession in full swing and coffee prices skyrocketing, it was tough going. But Souliotis, who had previously launched and built the successful Pizza Chef network in Vermont and New Hampshire, never considered throwing in the towel. Even with the economy in trouble, he and his family re-invested in the brand—developing and purchasing another 18 Dunkin’ restaurants in northern Vermont.

“Like any good entrepreneurs, we were struggling so we doubled down,” Souliotis says.

Those early days are now history. Now Souliotis is among a group of other successful Dunkin’ franchisees working with Dunkin’ Brands on the rollout of the next generation of stores, better known as NextGen.

When he opened his redesigned NextGen Dunkin’ restaurant near Burlington, Vt. last year, it was only the third in the country, behind a location in Quincy, Massachusetts and another in Corona, in Southern California.

Since then, many more NextGen Dunkin’s have opened across the country. 132 of the remodeled shops opened in 2018 and more are rolling out now as part of the first phase of NextGen. The brand is close to implementing phase two: a final design for all new concept stores. On the May 2, 2019 earnings call, Dunkin’ CEO David Hoffmann noted the Next Gen plan is coming along, and will be ready for display this summer.

“In 2018, we made substantial progress with our Blueprint for Growth designed to evolve Dunkin’ U.S. into a beverage-led, on-the-go brand, debuting our NextGen new store design, unveiling our new Dunkin’ brand identity, and successfully relaunching our espresso beverages served at the speed of Dunkin’,” Hoffmann also said in a recent press statement.

Part of the process of fine-tuning the future design is listening to the feedback from franchisees across the country who volunteered to pilot NextGen. Dunkin’ has established a special NextGen committee to review comments generated from franchisees like Souliotis, who serves on his Regional Advisory Committee (RAC), as well as on the Development Advisory Subcommittee (DASC) and a newly formed Development and Construction work group.

He says overall the experience has been encouraging, though some parts of the remodel have worked out better than others.

“We’ve had a positive reaction from customers. They really like the look and feel of the new store,” he says.

NextGen with a twist

In rolling out the NextGen redesign, Dunkin’s goal has been to update the brand with a more modern look and stress quick delivery and convenience—two attributes aimed particularly at millennials, who, restaurant analysts say, are fast becoming a dominant force in the marketplace.

“It’s about becoming relevant to the new generation while hanging onto their existing customer base,” according to Benjamin Litalien, founder and principal of FranchiseWell. “Virtually all brands have to go through this process.”

As the name change suggests, there is also a shift in emphasis towards coffee and beverages and away from donuts and edibles, with the NextGen design’s centerpiece featuring a rack of eight, bar-style taps offering cold beverages ranging from iced coffee and iced tea to nitrogen-infused cold brew, or nitro.

But, as, Souliotis points out, not all Dunkin’ shops have the same size, shape or capacity, so one design cannot fit all. Case in point, the conversion of his 1,000 square foot gas station shop into a NextGen restaurant. He settled on a “hybrid model” that includes some, but not all, NextGen elements.

In ways, it resembles the NextGen model Dunkin’ first premiered in its birthplace of Quincy, Mass. But, the Vermont version does not have a second, dedicated drive-thru lane for mobile pickup customers. (The Dunkin’ restaurant in Corona, the second in the country to go NextGen, also skipped this part.)

Dunkin’ agreed to let Souliotis keep some of the colors and materials from that shop’s recent remodel, while also incorporating major pieces from the NextGen template. The remodeled restaurant in the town of Milton (population 10,000) doubled in size and features the sleeker, more modern NextGen millwork and LED lighting.

“Because ours was a hybrid of old and new we stayed with much of the style and paint colors from our last remodel cycle,” Souliotis says. “We still have the new glass donut cases and taps and every other aspect of the NextGen, but much of the decor is not significantly different.”

Souliotis says one of the changes has less to do with the look of the shop than it does with the look of the people working there. Now they wear Life is Good t-shirts instead of traditional Dunkin’ uniforms.

“They are different, and lend themselves more toward a millennial-style work wear,” he says.

Still, while style is important, utility is also crucial. Souliotis says NextGen has gone over well with employees and customers, but believes there are still some kinks to work out regarding how the new model functions amid the hustle and bustle of the shop’s daily routine.

As an example, he doesn’t believe customers are taking note of the digital menu board, which is meant to direct them to retrieve their pick-up orders.

“I do not think customers look up when they are looking down to pick up their drinks,” Souliotis says. “Especially since we have the labels on the cups now. Many times for mobile order it says the name of the guest on the label and it is easy for them to find. The board seems like a distraction.”

There are still a “few bugs” to work out and there are opportunities to reduce the cost, he says, which could make conversion more appealing to all franchisees. All that aside, converting has brought a sales lift. Souliotis believes the boost is a combination of the new concept and the restaurant’s expansion (which also improved flow behind the counter).

Final design decision looms

At the time of its initial rollout, NextGen was met with some anxiety, according to John Gordon, founder of Pacific Management Consulting Group and DDIFO’s Restaurant Analyst.

“The franchisees were worried some overly costly or overly complex solution would be imposed on them. Dunkin’ and the franchisees are working well to avoid that problem,” says Gordon, who believes continued good coordination will make the final rollout successful.

“By contrast, McDonald’s has significant problems with their remodeling process to date. This actually was a catalyst for the creation of the McDonald’s Operators Association (MOA), McDonald’s first-ever franchisee association,” Gordon says.

Souliotis credits Dunkin’ with listening to his feedback. “[It] has been welcomed and incorporated into the next phase of redesign rollouts. I think overall, Dunkin’s redesign plans are headed in the right direction,” he says.

Gordon believes Wall Street is already anticipating a slower growth period for Dunkin’ as franchisees invest in NextGen conversions. “Franchisees aren’t going to go building a boatload of new stores until they find out what their remodeling bill is going to be,” he says.

Dunkin’ Brands is expected to unveil the final design later this year and investors will be closely watching because new store openings – and new concept designs – can help drive revenue growth.