Starbucks has a coffee cup climate problem like mobile, drive-thru booms

Since 1985, Starbucks has allowed customers to order with their personal reusable cups at the store counter, offering a 10-cent discount to customers who choose this sustainable option. But if you never knew the option existed, lost your reusable cup a decade or more ago, or simply gave up after forgetting to bring it with you and allowing mold to grow, the biggest change in reusable coffee cups is still on the way from the coffee chain, which uses an estimated 7 billion disposable cups each year, and comprises (along with the lids) nearly 40% of the company’s packaging waste.

By the end of this year, Starbucks has committed to making all U.S. store locations allow customers to use reusable cups — which were first unveiled in March 2022 — for all store visits, whether ordering at the counter, drive-thru, or via mobile phone. This is a significant turnaround for a company that said as of last quarter, mobile ordering, mobile delivery, and delivery accounted for 74% of sales. So far, the reusable cup option has only been offered to customers who order in-store.

Starbucks’ business has improved — the stock is up 27% in the past year, even though the stock market has underperformed this spring. The company says it now serves more customers during peak hours than it did before the pandemic. But more important to the reusable cup target are the trends of increasing sales of cold drinks, increasing personalization, and increasing engagement with their rewards program. The company says that over the past few years, the number of cold drinks ordered — drinks served in plastic instead of paper — has outpaced the number of hot drinks over the course of the year. Meanwhile, two out of three drinks ordered customizations like extra espresso shots and flavors, and 57% of all sales came from loyalty program members.

The move to mobile and the car came through years of struggles with long store waits that saw the chain lose many sales. There is a risk of increased waiting time for store visits as customers have to hand in their own reusable cups at drive-up windows, and mobile orders will not be ready for immediate pickup when customers arrive in stores if they choose to bring their own cup. The on-the-go coffee experience could be reshaped if Starbucks achieves the reusable cup goal.

Speed ​​of filling orders is key to Starbucks’ upper management layer. As part of its “renovation plan,” the company has implemented what it calls an “alarm system” to make complex beverage production faster to complete within stores, requiring less employee movement and machines that can make drinks without having to access ingredients from multiple stations.

Before the reusable program moved nationwide, Starbucks was conducting its final testing of the fully reusable option in Colorado, which began in mid-April and runs through the end of this month at all Starbucks locations in the state. The Colorado test includes drive-through applications, but not mobile applications.

“So far in the testing period, we haven’t seen any disruption to the customer experience,” a Starbucks spokesperson said.

“We run a lot of tests,” Amelia Landers, Starbucks’ vice president of product innovation, told CNBC in an interview last year when it first revealed the plan—among them covering customer convenience, drive-through speed, and employee operations. I also experimented with the dishwashing technique in Hawaii stores and on the ASU campus.

Starbucks is piloting reusable cup concepts in markets around the world. The latest test in Colorado looks different from what is practiced in other cities and countries.

In Taiwan, Starbucks launched a “borrow a cup” program in 60 stores throughout last fall, after a successful trial run in two stores, allowing customers to borrow a cup from a Starbucks store to order their drink at. To incentivize customers to return a mug they are borrowing, they must pay approximately $1.60 in refundable deposit per mug. Customers can then return their reusable cup at a participating store or using the Starbucks app at the cup return kiosk. The returned mugs are then cleaned and sterilized for reuse for future orders.

Similar programs have been adopted at select Starbucks locations in South Korea and Tokyo, while a tentative test of the initiative has taken place in Singapore. The returnable mug program has also been running in cities including London, Geneva and Paris, and the company plans to offer this program in all EMEA stores by 2025.

“Reuse leads to significant reductions in climate pollution and waste. On a large scale, reuse also saves companies money,” said Matt Prindeville, CEO of recoverable containers company Clynk. “If Starbucks repurposed the base in the metro areas in which it operates, they wouldn’t need consumers to bring their own cups. It would become the default way they serve coffee.”

In the United States, there hasn’t been much effort to implement this borrowing system, with the exception of five stores in Seattle. For two months in 2021, these stores offered customers the option to participate in a “borrow a cup” program. However, the storefront at the company’s Seattle headquarters has offered this borrowing program continuously since last March, with all drinks sold in reusable cups, and customers having the option to bring their own reusable cup or participate in the store’s borrow program.

For the rest of the Starbucks stores in the US, the focus remains on encouraging customers to bring their own reusable cup to fill the order. While the borrowing program addresses the problem of customers forgetting to bring their own reusable cup, the current approach in the US could be an easier starting point. extends [the] Conrad Macron, senior vice president of shareholder activist group As You Sow, which is among the investors pushing Starbucks and other food giants like McDonald’s to do more with reusable packaging options, said the current practice of accepting customers’ cups in stores.

Although progress is being made, Starbucks has a history of falling short of its sustainability goals with proposed timelines. In 2008, Starbucks set a goal of serving 25% of drinks in reusable cups by 2015, but a decade after that goal was launched, less than 2% of drinks are served in reusable cups, according to As You Sow. .

“They failed miserably,” Macron said.

Starbucks previously pledged to develop a recyclable coffee cup by 2015, and to this day, it still hasn’t done so. It has set a goal of using only renewable energy for global operations by 2020, and while it’s made a long way toward that, it only reached 72% of global facilities operated by the company in fiscal 2022.

History makes Starbucks sustainability watchers like As You Sow skeptical of the company’s year-end goal.

But the biggest results remain in the hands of consumers.

“Only a relatively small percentage of consumers want to bring reusables with them, and it’s hard to move the needle on this,” Prindeville said.

Consulting firm IGD found that 83% of consumers are open to change around reusable packaging, but need a nudge. Offering incentives to choose reusable materials, as Starbucks has done, can help motivate consumers. However, research shows that fees are more effective than discounts, Prindeville said. It’s the stick instead of the carrot.

“People’s natural fear of loss kicks in and leads to different behaviour. The higher the charge, the more likely it is to have an effect,” Prindevilly said.

Although the reusable cup option has existed at Starbucks for over 30 years, many consumers and Starbucks employees remain oblivious to its existence. Kelly McBee, circular economy coordinator at You Sow, says that when she tried to buy a reusable cup at Starbucks to order her drink, she was met with the worker’s confusion with the order.

“No one ever asks for reusable cups, and when they have to go get them from the shelf over there, they don’t realize it’s not just decoration,” McBee said.

She says there is an apparent lack of advertising that prevents customers from knowing or feeling motivated to order their drink in a reusable cup.

“It’s great that Starbucks is making that commitment,” McBee said. “They’re definitely leading the way, but are they going to take the next step to encourage customers to bring their own? That starts with advertising.”

Starbucks has signs in stores across the U.S. announcing the reusable cup initiative, and as it continues testing in Colorado, the company has sent an email to rewards program members informing them of the program, along with placing signs in the dashboard reminding customers to let the barista know. Whether they brought a reusable cup.

The future of the Starbucks Cup has broad ramifications.

“This is the symbol of Starbucks all over the world,” Landers told CNBC last year. “And if we can replace this disposable cup, this waste symbol, with this reusable one, we completely change people’s mindset. And at Starbucks, we can really set a paradigm and change the whole industry.”

Environmental advocates agree. “Small coffee shops are looking to these big companies to set a precedent for how their coffee shops operate,” said Grace Lee, Clean Water Action’s ReThink Disposable Program Manager.