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Can a cup rescue McDonald’s traffic?

The chain is testing a new recyclable cup to replace foam, which many believe could help locations in the South regain some lost drink traffic, says RB’s The Bottom Line.
Photograph: Shutterstock

The Bottom Line

Sometimes a seemingly simple decision such as cup material can cost a restaurant chain thousands of customers.

Especially when that chain is as large as McDonald’s.

The Chicago-based burger giant is testing a new type of large cup for cold drinks in a trio of markets. The cup is made from a recyclable material that is supposed to provide better insulation than a typical plastic or paper cup.

In short, the cups won’t sweat in hot weather when filled with iced tea.

“As one of the world’s largest restaurant companies, we have made a clear commitment,” Lauren Altmin, a McDonald’s spokeswoman, said in an email to Restaurant Business. “Use less packaging, drive innovation in sustainable packaging and recycling, and engage the millions of customers in the thousands of communities we call home to broadly adopt recycling behaviors as the norm.

“In 2018, McDonald’s eliminated all foam from our system around the globe. As we work to offer cups that deliver the best customer experience, a limited number of U.S. restaurants are testing the widely recyclable Versalite cup for large beverages.”

The issue highlights the challenges fast-food chains have when they try to evolve with their customer base without alienating existing customers. Some operators believe McDonald’s didn’t succeed in this case and hope the new cup can fix it.

McDonald’s has long been eager to shed its negative corporate image, something that has been a priority since Steve Easterbrook was named CEO in 2015.

Easterbrook has frequently said the company needs to use its “scale for good.”

That effort has featured a shift to cage-free eggs, the use of antibiotic-free chicken and eventually antibiotic-free beef. It is working with coffee giant Starbucks to develop a new type of cup and eliminate single-use plastic straws, among other things.

The move away from foam, which began in 2017, was part of that strategy.

Yet that move came at a cost. Some operators in the South say they’ve lost hundreds of thousands of dollars’ worth of sales and transactions because customers simply preferred the old foam.

When it’s hot, cold drinks in plastic or paper cups can sweat. Foam is better insulated and so that is not as much of a problem.

Some operators say customers would come in with foam cups from competitors. Or they would bring their own foam cups for the company to fill.

Transaction count has been a major issue for the company in recent years. Despite same-store sales growth, that count has continued to fall, including 2.2% last year and about 2% in the first quarter of this year.

McDonald’s has largely blamed the problem on slower service times and shrinking breakfast transactions. But sources say that the move away from foam has been a factor in the lost U.S. transactions.

To be sure, the pressure is building on other chains to take a similar move. There is a Change.org petition with nearly 70,000 signatures to convince fast-growing Atlanta-based chicken chain Chick-fil-A to ditch foam.

But finding a solution that both meets the company’s desire to improve its image while also ensuring that customers’ hands don’t get wet when they drink a $1 sweet tea could ultimately be the answer.

Some franchisees, in fact, call the Versalite cup a “million-dollar cup” because some believe they’ve lost $1 million worth of transactions with the move away from foam, and hope to recover those sales.

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