July 11, 2018 14 min read

This story appears in the July 2018 issue of Entrepreneur. Subscribe »

In New England, it is often said, Dunkin’ Donuts is religion. Not only does it have a rock-solid reputation for consistency -- the chain still uses the original coffee blend established by founder Bill Rosenberg more than 60 years ago -- it’s also egalitarian, the sort of place where your car salesman grandfather and your techie nephew might run into Patriots owner Bob Kraft, all out for their morning Dunks run. This universal quality is part of what has helped the brand engender a ritualistic loyalty and retain a distinctly local vibe, even as it has expanded to more than 12,500 stores in 46 countries. It is also why Dunkin’ does not take change lightly.

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This is not to say it hasn’t made innovations over the years. You don’t get this big without moving forward. But change is often slow, says COO Scott Murphy; it requires “uber-communication” with guests and inevitably results in an onslaught of hate mail anyway. “We have such loyal customers, who are coming four, five times a week,” Murphy says. “When we don’t get it right -- maybe we give them the wrong flavor coffee or a doughnut instead of a bagel or we change their cup…we change something -- it’s a big deal,” he says. Last year, for instance, when the chain announced it would be replacing its fan favorite Coffee Coolatta with something, in the words of then SVP of marketing Chris Fuqua, “better,” called the Frozen Iced Coffee, customers accused it of “basically ruining everything.”

Which brings us to the cups.

About 10 years ago, Dunkin’ Donuts execs began talking seriously about ditching the foam cups most stores were still using for most medium, large and extra-large hot drinks in favor of something more sustainable. Foam had endured for many reasons, and Dunkin’ used a lot of it: about a billion cups each year. Franchisees loved foam because it was cheap and light -- 94 percent air. Customers loved foam because it was easy on the hands and kept hot drinks hot and -- when holding a plastic iced-coffee cup inside -- cold drinks cold.

Everyone, it seemed, loved foam.

Except they didn’t. Foam had also become what Murphy calls a “veto vote” from the younger market. Some communities and college campuses had started banning it, and more were coming soon. It was time to find an alternative.

Murphy, who was VP of global supply chain back then, didn’t want to ditch the foam cups merely “for perception,” though; he wanted to move to something just as good, if not better. But he didn’t know what that was, or how to get it, or if it existed. “It was a lot more complex of a process and a decision than, frankly, I had anticipated way back when,” he says. “Even as new people joined the company, they’d say, ‘Oh, why don’t we just go to a paper cup?’ ”

Karen Raskopf, chief communications and sustainability officer, was one of those people. “That’s what I said on my first day here” in 2009, she says. “And they said, ‘Well, it’s funny you ask that; we’re going to have a meeting on the cup this afternoon.’ And I walk in, there’s like 15 people sitting in there, and I’m like, Oh, come on; how hard can this be?”

As it turns out, pretty hard.

Image Credit: Floto + Warner

Dunkin’ Donuts already had paper cups, of course. But they were far from perfect. While paper cups might have appeared to be greener than foam, most on the market, including the ones Dunkin’ used, had plastic or wax linings that prevented leaking but also hindered recycling. They cost more, too, and didn’t perform nearly as well as their foam counterparts.

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What’s more, the paper cup Dunkin’ used for its small hot drinks did not accommodate Murphy’s preferred lid, which is resealable -- not just reclosable -- and had taken a long time to perfect. He is very proud of this lid. “You can actually tip our cup over,” he says. “I don’t recommend it, but it all stays in.” Any new cup, as far as he was concerned, would have to accommodate this lid, or work with one that was just as good.

Dunkin’s paper espresso cups, meanwhile, required a cardboard “comfort sleeve” that proved a nuisance for mobile customers. “You put them in your cup holder in your car, you go to pull it out, the sleeve stays in the car and it’s just very clumsy,” says Murphy. Also, if you’re having a hard time keeping track of all these cups and lids, so were they. Between the various types and sizes, the cups, lids and sleeve for hot drinks alone amounted to 11 different SKUs, “which was crazy,” says Murphy.

He tasked supply chain manager Joseph Hellyar -- who eventually earned the very Massachusetts nickname “Joey Cups” -- with finding viable options for a single replacement cup that could be used, in four sizes, for all hot drinks. The ideal cup would be recyclable, compostable or otherwise very sustainable; keep coffee hot and hands cool; work with the resealable lid; and not cost franchisees too much. Raising coffee prices to pay for the new cups, says Murphy, was not an option.

Over the next 10 years, Hellyar met weekly with the Dunkin’ sustainability team and reported findings once a month to Murphy’s operations team and the marketing team. They saw dozens of options and either focus-grouped or tested the best 15. There were paper cups with external sleeves and paper cups with internal sleeves, and with both compostable and noncompostable linings. A recyclable plastic polypropylene cup market-­tested in New York City in anticipation of the city’s 2015 foam ban -- which was eventually struck down but reinstated this spring -- was rejected because the lid was different “and consumers had a real problem with that,” says Murphy.

They held focus groups about totally different topics during which they served hot coffee just to watch people interact with potential cups. Murphy became obsessed with the “cup management process,” which told him whether or not a cup was any good. “You’re holding the cup,” he says. “After a few seconds, it starts to get a little bit too hot. So you put it in your left hand while your right hand cools. Then you switch back. And then you end up doing the sort of Maui hang loose, where you put your thumb on the top of the lid and your pinky on the bottom of the cup.” Any test cup that resulted in a Maui hang loose did not go any further. Murphy did not want his customers to have to solve the problem of cups that were too hot to hold; he wanted them to have a cup they could hold with one hand the entire time.

There were other nonstarters, like the cup made out of recycled water bottles someone was creating for the airline industry. “It was very light, but what they couldn’t do is make a hard edge, so the bottom of the cup was almost beveled,” says Murphy. “It was like a Weeble. I remember thinking, This is where I go home to my wife and tell her what I do for a job: 10 highly paid people around a conference table poking a cup to see if it could pass the tip test.” It couldn’t.

Hellyar and his team were regularly sent suggestions and prototypes, the best -- or most entertaining -- of which they shared with leadership. “Do you remember the edible cups?” Murphy asks Raskopf. “A lot of them were made out of fungus.”

“We got excited about that,” she says.

“We did get excited about that,” he says. “They claimed you could literally just throw [them] into the Charles River and they would disintegrate, they hoped, within 90 days.”

And on and on it went. In 2009, as an interim solution, Dunkin’ reduced the foam in its medium cups. In 2010, the company teamed up with competitors Starbucks and Tim Hortons, which were also wrestling with the environmental impact of their cup usage, to share prototypes and ideas at a “Cup Summit” held at MIT. For three consecutive years, the companies invited manufacturers, recyclers, NGOs, academics, raw material suppliers and others from the food and beverage business to talk about possible answers to the problem of packaging as well as the limitations of recycling. The biggest hurdle was that many of the more sustainable solutions could not be created in the volume these companies needed, while many recycling programs were unable to process that many cups even if they were recyclable. The summit was eventually discontinued.

In mid-2015, one of Murphy’s paper suppliers merged with the manufacturer of his beloved lid -- a company he declines to name. Sensing an opportunity, he issued them a challenge: Make us a sustainable, high-performance paper cup that can work with the lids we love. The firm accepted. It took them two years to perfect the result: an affordable, double-walled paper cup that’s easy on the hands. A layer of air sandwiched between two layers of responsibly sourced paper provides nearly foam-level insulation -- better than a single wall and a sleeve. It can be made in four sizes. The reclosable lid is a perfect fit on all of them.

The reaction from consumer feedback groups was positive. So Murphy moved forward. He toured around to different franchises to do a “cup show” in which he poured coffee into the new cup, told franchisees to drink from it and asked them how it felt. “It was great,” he says. “It hit on all the criteria we’d talked about -- cost, performance, environmental -- and it was with a trusted manufacturer we knew could scale up. And we got to keep our existing lid.”

Now they just had to tell the customers.

Image Credit: Floto + Warner

In February, Dunkin’ Donuts introduced its new double-walled paper cup and announced it would replace all foam cups by 2020, with rollout to begin this spring. Reaction, says Raskopf, has been mostly positive -- though, of course, for now the elimination of foam is mostly theoretical. But there is already one reason to worry. In early market tests of foamless stores, Murphy says they uncovered some crew members hoarding cases of foam to serve the regulars. “For every quote-unquote millennial who won’t drink out of foam and wants to make the environment a better place,” he says, “there’s also my father, who’s a veteran, who thinks it’s the best cup in the world and will save that foam cup to store nails in his basement.”

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There is also a segment of consumers extremely devoted to “double cupping” -- or requesting a foam “hot cup” to put their plastic iced-coffee cup inside of -- a practice Murphy says started in Rhode Island and has spread to a few other nearby markets, as well as to some parts of Florida. Rhode Island is one of Dunkin’s biggest iced-coffee markets, and the practice is so widespread that some stores will automatically include a hot cup with every iced-coffee order. Solutions to this practice, including branded koozies and a reusable mug program, have not curbed the demand. “I often get cast with ‘How do we make the cold cup not sweat?’ and my answer to that always is ‘You’re asking me to change physics,’ ” says Murphy. “It’s really hard.”

As a result, some customers have been taking the initiative. Diana Goodine, a busy mom of four and a daily Dunkin’ customer in suburban Rhode Island, began to stockpile foam cups the day the brand announced the news. Goodine says she’s tried the koozies, but they make her cup wobble. Her brother-in-law, who plans to install a permanent foam cup in his car, says that wrestling the sleeve onto his iced coffee is like trying to get it into a wet suit. (Dunkin’ has a fix for that: “As goofy as this idea sounds, half-koozies,” says Murphy. “They’re about an inch or two tall, so they don’t go up the full cup, but they prevent that condensation ring that happens on your desk. It’s almost like a coaster.”)

Raskopf says that much of the focus now is on how to get parts of New England, and especially Rhode Island, prepared. (“We have a whole group of people working on exactly that,” says Raskopf. “We don’t have the solution yet.”) They don’t know if they’ll warn customers about the final foam date or if, instead, they’ll cut them off cold-turkey. Some franchisees have asked if they can please tell customers in the month leading up to the transition to save their foam cups. (“We’re exploring all options,” says Raskopf.) Murphy is hoping double-cupping devotees might reconsider the sleeves or reusable mugs. “But we’re going to get hate mail from [people] who are very upset,” he says.

While Murphy and his team are still finalizing a rollout schedule, the first priority for replacing foam cups will be given to markets with legislation and bans. Meanwhile, the brand is also in the process of changing the cold cups’ lids from PET to a recyclable polypropylene, which Raskopf says should remove 500,000 pounds of material from the waste stream every year, and are meeting about more sustainable straw solutions. Also, 50 “next-generation” stores expected to open this year are 25 percent more energy-­efficient than standard stores and offer digital kiosks, a drive-through dedicated to app orders, cold brew on tap and healthier to-go snacks. All will carry the double-walled paper cups.

In January, Dunkin’ unveiled one such store in Quincy, Mass., home of its very first store. Daniel, who takes my order at the counter on a late spring day, says that customers know the deal, but they’ll still ask for foam -- the double-cuppers especially. “They get mad, but we say it’s a foamless store,” he says. The good news is that they don’t leave. Says Daniel, “They just ask for double cold cups.”