Driving along Plenty Road in Preston this weekend, you might feel decades melt away when you spot kids slurping milkshakes outside a shop covered in mustard-coloured tiles. Tyler's Milk Bar looks like a 1950s relic but the business only opened last July.

Inside, among the honey joys and cloud lollies, you'll find coffee made with speciality Padre beans, sourdough salad sandwiches and vegan-friendly finger buns.

Two Australian business innovations – the milk bar and the cafe – are colliding here and on other suburban streets, creating new neighbourhood landmarks with old soul.

Once a vital part of people's daily routines, the milk bar is now an endangered species. Gleaming convenience stores and big supermarkets have outmanoeuvred the corner shop, leaving at least 1500 rundown shopfronts behind in Victoria. Now a new generation of entrepreneurs is reinventing them for the flat-white generation.

In the past 12 months, Vermont General Store, Jack The Milkman in Murrumbeena, Yarraville's Madison Corner Store and a revamped Jerry's Milk Bar in Elwood have opened their doors.

"We instantly knew we had to have the space because of the uniqueness of it and because it has so many beautiful memories for people," says Jacinta Price of the milk bar that she and two business partners last year turned into Matilda, a coffee shop and corner store in Mont Albert North.

"It's basically in the middle of complete suburbs. It's just houses everywhere. There was a great sense of community, with people that were home every day because of COVID."

Suburban shopping strips that seemed obsolete before the pandemic have taken on new significance, as people go on daily neighbourhood walks and spend fewer days in business districts.

"The milk bar concept came from our experience of hospitality during lockdown – people wanting to buy local, support their community," says Sam Fisher, who owns Tyler's with her sister Alli.

"We've got 10-year-olds coming in and buying milk and bread on their own. A couple met here during lockdown and that's blossomed into a relationship."

The sisters embrace the values associated with old-school corner shops. They say service is just as important as the blue heaven milkshakes and smoked cola spiders they serve.

"They've always been the central hub for the community: a meeting place, a support network, not only a place to get your bread, milk and supplies [but] somewhere to catch up on the local gossip or put up a note in the window to advertise a lost dog," says Eamon Donnelly, creator of The Milk Bars Book.

Memories of simpler times when a bike ride to the milk bar was a weekend highlight are also the dollop of nostalgia many people are craving right now. The Fisher sisters are happy to oblige, serving spaghetti on toast, crumpets and melting moments.

At Matilda, scones with jam and cream, free-range ham and cheese toasties, and a poached chicken baguette are part of the homely treats on offer. Price describes the food as "things that people are always craving but with real freshness", with everything visible at the counter. "People can buy with their eyes, similar to what the milk bar was with lollies out on display."

But Price also offers a vegan toastie and cakes that are gluten-free. Artisanal loaves of bread come from Noisette bakery and bottles of milk are from St David's Dairy.

Tyler's has a wall stacked with chocolate made in Coburg, pickles from Reservoir and ocean-friendly sunscreen, plus bulk containers of olive oil, coffee beans and more. It's the corner store reinvented for the eco-conscious consumer of 2022.

Jerry's in Elwood, which traded as a milk bar for 30 years until the 1990s, eschews the retail side of things, preferring to keep locals happy with favourites such as harissa corn fritters, plus a strong line-up of baked goods.

When Oliver Gualano and his partners reopened Jerry's in March 2021, Bayside residents breathed a sigh of relief that the two-storey building would still belong to the community.

Once Kane Duong finishes renovations on Jack The Milkman and can open for dine-in, he'll serve Australian cafe favourites like smashed avo and eggs Benedict, instead of just takeaway rolls and coffees. He spent many months convincing the owners of the Murrumbeena milk bar to lease the site, getting his wife to translate and negotiating with the owners' adult children. It was worth it.

"When people heard about a milk bar turning into a cafe, they loved it. They were excited to know something local was coming."

Jacinta Price of Matilda says people are always coming into her shop and "talking about how they used to buy lollies or the newspaper here".

"They hold a special kind of nostalgia, harking back to those moments picking your lolly mix, trying the latest iced confection, your first smoke, kiss or even first job," says enthusiast Eamon Donnelly.

He supports the revamped versions we're seeing, pointing out that the local cafe today has quite a lot in common with old milk bars.

"We need connection, we need a meeting place, we need to feel supported. If they retain some connection to the past, be it in name, some historical signage retained on the facade, or a dish named as a homage to the history of the milk bar, that is wonderful."