A thought experiment for Starbucks

sbux_mug_small.jpgOn a recent trip to London, I was surprised to see Starbucks serving in-house drinks in nice washable mugs. In the U.S., all beverages are served in paper cups, even if they are for consumption in the store.

Starbucks has made good progress reducing the impact of its billion paper cups, but many commentators and studies show ceramic mugs, especially over repeated uses, deliver a more sustainable experience and lower greenhouse gas emissions. (For a review, see a good Triple Pundit post.)

Ceramic mugs also save money.

So, while sipping a free-trade drip, I thought about some of the arguments I would make to bring this model to the U.S. if I worked at Starbucks.

The only catch? All arguments have to pass a “I don’t give a damn about the environment” test. Only standard business case rationales are allowed, with no appeal to higher moral ground.

  • Material cost savings outweigh washing costs: Ok, I admit I haven’t fully scrubbed the numbers but the high level view looks good. An average ceramic mug lasts 3,000 uses and costs perhaps $2.50. A paper cup, sleeve and top lasts once and cost as much as $.05. That’s 60 times as expensive on a per-use basis. Of course a dishwasher has to be installed and run, and the mug has to be washed between uses, but I feel confident there is pretty good business case here (industry experts, please step in and trash me in the comments if you disagree).
  • Higher table turn: This is probably more relevant than the economics of cups. Starbucks’ strategy is not selling coffee. It’s the creation of the “third space,” a gathering place outside of home and work. The price of entry is a $4 latte. The problem is that, especially in busy locations, more people want to hang out in the cool space than there is room for.

    The solution? Ceramic mugs. No top and an un-insulated container mean that your drink cools faster. You drink faster, go back to your normal life, and free up space for other folks to come in and enjoy the space. Table turns are a very important metric of profitability in food service, and ceramic mugs help increase them.

  • Better customer experience and brand alignment: It was chilly and raining in London (surprise!) and I wrapped my hands around the cup of coffee and noted what a better customer experience the mug was. I felt better about the whole Starbucks experience than I have in a long time.

    There’s one more benefit. When I was done, I didn’t throw the brand I connected with in the trash. It’s a subtle distinction, but I’d prefer not to have my brand tossed in the garbage.

Thoughts? Anyone work at Starbucks and care to comment? Anyone had to make this case even to the managers of the company cafeteria?

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tom

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  1. Bob Kuehne - November 29, 2006

    the costs of ceramic vs. paper are long and involved. here are two recent discussions i encountered in my green blog readings:

    http://www.treehugger.com/files/2004/11/ecotip_coffee_c.php
    http://www.triplepundit.com/pages/ask-pablo-the-coffee-mug-debac-002246.php

    discuss… ;)
    bob

  2. Dimitry - November 29, 2006

    Absolutely! Starbucks has long been trying to projecy an “environmentally friendly” image, why not switch to washable mugs? I personally prefer our local coffee shops to Starbucks, and those use washable mugs (and also are cheaper and have more character), and the last time I visited Starbucks I was asking myself this same question. It just makes Starbucks seem that much more corporate, and makes me want to go there less.

  3. ilia - November 29, 2006

    In Canada, Starbucks serves in ceramic cups/plates if you just ask.

  4. Greg - November 29, 2006

    Starbucks in North Carolina asks if you want it here or to go.

    If you say here, they put the beverage in Ceramic Mugs and your pastry on a glass plate with silverware.

    I would be surprised if that wasn’t the case elsewhere. Heck, I make myself sit and enjoy my beverage – I am less stressed, I drive better (Most all Starbucks have drive throughs in NC), I am not burning fuel unneccsarily, and I am not using a throw away cup.

  5. johnzilla - November 29, 2006

    Ceramic vs. paper is not a simple issue, at all. I’ve never worked at Starbucks, but I managed kitchens for large full service restaurant chains for over ten years.
    Ceramic requires washing. Depending on the location of the store there are different standards for what constitutes “washing” and this is determined by the local health codes. There is no single standard. So, what works in one state or even one city might not work in another. You can choose to wash with a machine, a person, or a combination of the two, such as the person doing a rinse and then using a smaller machine for the wash. Or using a large machine for all three.
    With a machine comes expenses. Capital expenses such as buying and leasing the machine, for example, as well as all of the expenses for detergents and other additives and the things that the machine needs, like those special racks for storing the dirty and clean dishes. Then you need staff to run the machine. A rack of mugs can be heavy for some people…the people that can sling a cup of coffee may not be able to lift a rack of mugs many times during a shift.
    Then there are environmental concerns. The amount of detergent that gets sent by the machines into the drains, for example. The actual amount of water used per mug, for example. Hint: if there’s a person doing pre-rinses or washing, they will almost certainly use a lot more water than is actually required to clean the mugs or dishes. This is a “pro” for the machine…it will consistently use the same amount of water over and over…a person won’t, no matter how hard they try. People = waste…any manager who has had to monitor food and inventory costs will tell you this is true.
    And don’t forget repairs, and calibration. Take McDonald’s, for example. There’s a whole series of maintenance procedures that have to be performed every week and every month. Calibrating the soda dispensers, for example, so that no syrup is wasted. The same is true for dishwashers…you want the right amount of detergent every time…not too little because the dishes won’t be clean, and not too much because that will make your costs go up. So, someone will have to maintain the dishwasher to keep the cost comparisons between ceramic and paper in line. And what happens when the machine stops working? What do your customers do? Do you switch to paper temporarily? Ask staff to wash manually?
    As a manager at McDonald’s about 15 years ago, I remember arguing with kids over the old styrofoam vs. paper argument. These kids would come in and really get off on how eco-conscious they were by demanding that their burgers be wrapped in paper, not styrofoam. The problem was that in my state (and maybe other states) all food service paper had to be waxed, and at the time, waxed paper could not be recycled. But styrofoam could…and my McDonald’s even had nice big green bins specifically for the styrofoam so it could be recycled. But these kids could not be dissuaded…they demanded paper, and any calm, rational discussion about how styrofoam was actually the more eco-friendly choice at the time was met with extreme suspicion, paranoia, and distrust.
    Also, ceramic mugs get broken and lost (people throw them out). It happens.
    Paper is easy. Easy to store, cheap to buy, easy to handle, recyclable. And, incidentally, you can do things like put marketing campains on the paper cups, promotions, advertising, etc.

  6. Julia - November 29, 2006

    I would be curious to know what the distribution is between in-house and take-away drinks at starbucks. I would imagine that the lion’s share of drinks are ordered to go, and that the particular economics of washing certamic mugs versus paper would vary by this distribution at each particular store.
    I agree with the previous post that sometimes your environmental instinct cannot be trusted to identify the least bad alternative. However, I have never seen any sort of recycling for paper cups. If they could be made from recycled paper, that would be one thing, but it seems they would have to be made with more than 10% post-consumer content for them to get major points on that side.
    And, I spend more time if I have a ceramic mug–I put the saucer on top to keep the heat in, and feel justified in taking up space in the cafe for longer since I have a little ceramic monument to my paying the ‘entrance fee’ adorning my table.

  7. Randy - November 29, 2006

    Every Starbucks here in west Michigan I go to has ceramic mugs for sit-in customers, but typically you need to ask for them.

  8. ClarkBaxter - November 29, 2006

    Interesting discussion. I think the best point made was regarding the distribution of take-away vs. in-house. I tend to agree that most customers take-away, which makes the economics of ceramic cups very tenuous. It seems to me that the better solution, if the goal of this is to get Starbucks to change policy in favor of a more green solution, would be to offer some discount for drinks (take-away and in-house) if the purchaser provides there own cup — say 10% toward the cost of the drink. This would encourage the purchase of Starbucks’ merchandise, which is an effective form of marketing. Combined with the slight savings in not having to pay for paper cups and the added benefits from having a positive image amongst customers, this may actually make economic sense and encourage green behavior.

  9. Peter - November 29, 2006

    Starbucks in every city I’ve lived in for the past 5 yrs has offered ceramic mugs (Minneapolis, Tucson, and now Philly). One does typically have to ask for them, but they have them and I’ve seen quite a few folks using them her in Philly.

  10. Josh - November 29, 2006

    From a strictly business sense paper cups that are thrown away in public trash cans or even thrown on the street, although environmentally irresponsible, are very effective advertising tools. Seeing the trash alerts visitors to a city that there is a Starbucks nearby and for those addicted to Starbucks products, there is less chance they will pass through the neighborhood without making a purchase. Ceramic mugs do not leave the store, thus they don’t attract more business, therefore I could not very well attribute any marketing costs to the mugs whereas I could to the cups.

  11. Rebecca - November 29, 2006

    Clark makes a good point (number 8). From my limited experience with Starbucks I thought they did have a 10% reduction in price for bringing in your own mug. This is a great way to sell merchandise as well as keep paper usage to a minimum.

  12. Rachel - November 30, 2006

    Starbucks has practices in place for you, the customer, to be proactive and not send those paper cups to the trash. You can ask for a ceramic mug at any Starbucks, and your drink will be discounted by 10 cents (not 10%) as an incentive to not use paper. You can also bring your own mug and you will get the same incentive. So it is up to you, dear people, the choice is in your hands!

  13. Ben - December 1, 2006

    My choice is to avoid corporate coffee candy and brew my own. I save $3.50 (savings for a terrapass?), use my own familiar comfy mug, and get better coffee to boot.

  14. Shawnk - December 8, 2006

    I agree with #8, bring your own container to put the coffee in. This has the advantage of allowing you the customer to more fully control the impact of the beverage container. From the material it’s made, the method and impact of washing, all the way through to the lifespan and eventual disposal. Not to mention that you get to drink out of your favorite mug that makes a statement about who you are!

  15. Terence - December 9, 2006

    I worked for three years for Starbucks Coffee. The corporation sincerely promotes improved environmental standards in everything from encouraging customers to take coffee grounds for composting to using washable mugs and plates to selling and giving discounted beverages in personal cups. It fails, however, in implementation.
    Employees are people, and people are lazy. It is easier to change a garbage than it is to collect and wash many mugs and glasses. You can generally ask for a mug at any location, but here in the Northeast I know you should expect a dirty look, though perhaps behind your back.
    Starbucks is doing the right thing. The rest of us have to step up to the plate if we expect them to have real impact with their policies. Unless someone can offer suggestions on how to get the lazy people that work in and patronize their locations to make the inconvenient decisions of using their own or store-provided cups, I think we would be better served focusing our environmental efforts on companies that don’t actually care, or educating people who would care if they knew better.

  16. Jennifer - April 10, 2007

    ok i agree with you all about useing altunative to styrofoam and papper cups ect…
    but i am reseaching the effects of styrofoam on the earth. think that America is just cheap and acts like they care but most of the “officals” really don’t. or they would be doing more to stop the use of pastice, styrofoam, paper, and ect…
    but sure i think so of them care, nad it’s in the back of everyones mind but nobody is really making an extrem effort to stop this thing i mean we might not notice gobal warming but it’s here and it’s now.. please spreed the word..
    i am trying to stop the use of styrfoam in Columbia mIssouri and hopping that other places will follow.

  17. Dave - August 2, 2007

    I try to take an insulated mug with me everywhere I go. It can be used at drivethroughs if you announce it over the mic that you have one. I prefer to avoid drivethroughs at all costs and the mug works at the counter just as well. Tim Horton’s offers a 10 cent discount. You can wash or rinse it at the end of the day and it means less detergent if you wash once for two or three uses. When it’s just me using the mug, I don’t feel the need to sterilize it as often. The mug keeps my drink warm for longer too. At home I even put my empty water glass in the fridge after using it and wash it only at the end of the day. I drink at least 8-10 glasses of water per day so this adds up if you use a new glass each time. An added benefit is slightly colder water when I fill it.

  18. meg - August 31, 2007

    Starbucks started with mugs and plates in their stores in the early 90s, but they were losing them to theft.

  19. Terry - September 16, 2007

    Every Starbucks here in west Michigan I go to has ceramic mugs for sit-in customers, but typically you need to ask for them.

  20. Michael - October 28, 2007

    I worked at Starbucks for over 5.5 years, 5 different stores, and as a barista, shift supervisor, and assistant manager. Every Starbucks that I worked at had ceramic mugs and plates. The problem is with the employees. It is in the training to ask the customer if they want it for here or to go but no-one ever asks. It is laziness. One, you have to actually ask the customer, two, you usually will have to bus the table and collect the dish, and three, you have to wash it when their done. Therefore there is more work to do for the “partner.” I had no problem with the extra labor but noticed that a majority of the employees just didn’t care.
    As far as the incentives go. Policy is you get $0.10 off per personal cup. You do not get any discount for using the ceramic mugs in the store. I consistently asked my district manager to increase this incentive because it is not worth it for the average lazy American to bring their cup into the cafe and then carry it with them for the rest of their day. I agree that 10% of their drink order would be very good. Especially when their order is $4. $0.40 is much better than $0.10 and would not significantly hurt their bottom line. After all they are Starbucks!

  21. chris brandow - October 30, 2007

    Two thoughts:
    1. if Starbucks started auditing stores via “secret shoppers” and measured performance in part on whether customers were asked for cup/mug preference, I am pretty sure that behavior would change quickly.
    2. glass mugs have much less energy embedded energy than ceramic.

  22. Archie Clark - April 14, 2008

    To The extent that trees produce oxygen they are an important part of the earth�s ecology. This is why the use of paper products can contribute to a healthy environment. But as with many questions, contradictory factors manifest themselves. Through the processing and disposal of paper, harmful effects happen. I don�t presume to know the net effect between increased oxygen and the issues inherent with paper production.
    I do know this. You don�t promote the use of a product by means of a boycott. I think it interesting that there is so much effort spent on recycling paper. While well intended I believe the results of paper recycling can be actually counterproductive. I say this because pulp trees are planted and cultivated as a crop. Anything that will reduce the demand for a crop will put pressure on the land owner to put the land that once was used for pulp production into another use. Recycling has the effect of a well intended boycott.
    I also think it unfortunate that if any element of the popular environmental movement is scrutinized and found to be not fully proven that the person with the open mind is said to not care about the environment. I care and I also question assertions.

  23. paper machines - June 22, 2008

    I consistently asked my district manager to increase this incentive because it is not worth it for the average lazy American to bring their cup into the cafe and then carry it with them for the rest of their day.

  24. jason wallace - July 10, 2008

    I try to take an insulated mug with me everywhere I go. It can be used at drivethroughs if you announce it over the mic that you have one. I prefer to avoid drivethroughs at all costs and the mug works at the counter just as well. Tim Horton’s offers a 10 cent discount. You can wash or rinse it at the end of the day and it means less detergent if you wash once for two or three uses. When it’s just me using the mug, I don’t feel the need to sterilize it as often.

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