- Starbucks says it’s on track for customers to be able to order with reusable cups using ordering methods like drive-thru and mobile in every US location by the end of this year.
- Mobile and drive-thru services have become big revenue drivers at Starbucks, and a major test of the returnable program is taking place in Colorado.
- Starbucks has a history of falling behind on its sustainability goals, but has made significant progress, and cups are crucial, with an estimated 7 billion single-use cups used each year.
Since 1985, Starbucks has allowed customers to order at the counter with their personal reusable cup, but expanding to drive-through and mobile ordering is a much bigger deal.
Starbucks
Since 1985, Starbucks has allowed customers to order at the counter with their personal reusable cups, offering a 10 cent discount to customers who have chosen this sustainable option. But if you never knew this possibility existed, lost your reusable mug a decade or more ago, or just gave up after you forgot to take it and it got moldy, the biggest change in reusable coffee mugs is yet to come before coffee chain, which uses an estimated 7 billion single-use cups each year, which (together with lids) accounts for about 40% of the company’s packaging waste.
Starbucks is committed to allowing all U.S. stores by the end of this year to enable the use of reusable cups – which first launched in March 2022 – on all store visits, whether it’s counter, drive-thru or mobile ordering acts. That’s a big change for a company that last quarter said mobile ordering, drive-thru, and delivery accounted for 74% of its revenue. Previously, the reusable cup option was only offered to customers who order in-store.
Starbucks’ business has been improving — the stock is up 27% over the past year, despite a slacker in stock market performance this spring. The company says it now serves more customers at peak times than it did before the pandemic. Most important for the goal of the reusable cup, however, are trends towards increasing sales of cold drinks, increasing individualization and a stronger correlation to the rewards program. The company says that in recent years, the number of cold drink orders — drinks served in plastic rather than paper — has exceeded the number of hot drinks ordered year-round. Two out of every three drinks ordered have now requested personalisation, such as additional espresso shots and flavors, and 57% of all sales are from loyalty program members.
The move to mobile and drive-thru came after the chain had struggled for years with long in-store waits that caused it to lose a lot of sales. There is a risk of longer wait times when visiting stores, as customers have to hand baristas their reusable cups at drive-thru windows and mobile orders are no longer immediately available for pickup when customers arrive at the store if they want to bring their own cup. The coffee-on-the-go experience could change if Starbucks achieves its goal of reusable cups.
Speed of order processing is critical to Starbucks senior management. As part of its “reinvention plan,” the company has implemented what it calls the “siren system” to make in-store manufacturing of complicated beverages faster, require less movement for staff, and create machines that can make beverages without requiring access to them is ingredients from several stations.
Before rolling out the reusable program statewide, Starbucks is conducting its final test of the fully reusable option in Colorado, which began in mid-April and will run at all Starbucks locations in the state through the end of this month. The Colorado test includes drive-thru orders, but not mobile orders.
“So far we haven’t noticed any degradation in customer experience during the testing period,” said a Starbucks spokesman.
Amelia Landers, Starbucks vice president of product innovation, said in an interview with CNBC last year when the company first unveiled the plan, “We’re running so many tests” — including tests on customer comfort, drive-through speeds, etc. employee operations. Dishwashing technology was also experimented with in stores in Hawaii and on the Arizona State University campus.
Starbucks has experimented with reusable cup concepts in markets around the world. The recent tests in Colorado look different than tests conducted in other cities and countries.
In Taiwan, after a successful pilot in two stores, Starbucks launched its Borrow A Cup program in 60 stores last fall, allowing customers to borrow a cup at a Starbucks store to order their drink there. To give customers an incentive to return the mug, they have to pay a refundable deposit of about $1.60 per mug for each mug they borrow. Customers can then return their reusable cup to a participating store or to a cup return machine via the Starbucks app. Returned cups are then cleaned and disinfected for reuse for future orders.
Similar programs were rolled out at certain Starbucks locations in South Korea and Tokyo, while a temporary test run of this initiative took place in Singapore. Cities like London, Geneva and Paris also had a reusable cup program. The company plans to roll out this program in all stores in Europe, the Middle East and Africa by 2025.
“Reuse leads to a significantly greater reduction in climate pollution and waste. At scale, reuse also saves companies money,” said Matt Prindiville, CEO of returnable container company Clynk. “If Starbucks makes reuse the norm in the metro areas where it operates, consumers will no longer need to bring their own cups. It’s just going to become the standard way of serving coffee.”
With the exception of five branches in Seattle, little effort was made to introduce this credit system in the USA. These stores offered their customers the opportunity to participate in the Borrow A Cup program for two months in 2021. However, the store at the company’s Seattle headquarters has been offering this loaner program on an ongoing basis since last March, with all beverages sold in reusable cups and customers having the choice of bringing their own reusable cup or participating in the store’s loaner program.
For Starbucks’ remaining U.S. locations, the focus remains on encouraging customers to bring their own reusable cup to fulfill an order. While the loan program addresses the problem of customers forgetting to bring their reusable cup, the current approach in the US could be a simpler place to start. “It stretches [the] “The existing practice of accepting customer cups in stores is being broken,” said Conrad MacKerron, 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.
Although progress is being made, Starbucks has historically not met sustainability goals within proposed timelines. In 2008, Starbucks set a goal to serve 25% of beverages in reusable cups by 2015, but a decade after setting that goal, less than 2% of beverages were served in reusable cups, according to As You Sow.
“They failed miserably,” MacKerron said.
Starbucks previously promised to develop a recyclable coffee mug by 2015, but to date has not done so. The company has set a goal of using only renewable energy for its global operations by 2020, and while it has made great strides in this direction, fiscal 2022 only reached 72% of the assets operated by companies worldwide.
The story has Starbucks sustainability watchdogs like As You Sow skeptical about the company’s year-end goal.
But the biggest results remain in the hands of consumers.
“Only a relatively small proportion of consumers are willing to bring their reusable products with them, and it is difficult to change this,” said Prindiville.
Consultancy firm IGD found that 83% of consumers are open to change when it comes to reusable packaging but need a push. Offering incentives to choose reusable products, like Starbucks has done, can help motivate consumers. However, research shows that fees are actually more effective than rebates, Prindville said. It’s more of a whip than a carrot.
“People’s natural fear of loss sets in and leads to different behaviors. The bigger the load, the more likely it is to have an impact,” Prindiville said.
Although Starbucks has had the ability to offer reusable cups for over 30 years, many Starbucks consumers and employees are still unaware of its existence. Kelly McBee, senior circular economy coordinator at As You Sow, says that when she tried to buy a reusable cup at a Starbucks to order her drink from, she encountered confusion from workers at the request.
“Nobody ever asks for the reusable cups, and when they have to pull them off the shelf there, they don’t realize they’re not just decoration,” McBee said.
She says there’s a distinct lack of advertising preventing customers from ordering or incentivizing their drink in a reusable cup.
“It’s great that Starbucks is showing this commitment. They’re certainly leaders in this way, but will they then take the next step of encouraging customers to bring their own products? That starts with the promotion,” McBee said.
Starbucks has posted signs in stores across the United States promoting the reusable cup initiative. As testing continues in Colorado, the company has sent out an email to Rewards members to let them know about the program, asking customers to let their baristas know if they’ve brought in a reusable cup.
The future of the Starbucks Cup has far-reaching implications.
“This is the most iconic Starbucks in the world,” Landers told CNBC last year. “And if we can replace that single-use cup, that symbol of waste, with this reusable cup, we’ll completely change the way people think. And at Starbucks, we can really lead by example and transform the entire industry.”
Environmentalists agree. “Smaller coffee shops look to these larger companies to set a precedent for how their coffee shops should operate,” said Grace Lee, director of Clean Water Action’s ReThink single-use program.