Why Getting Rid of Plastic Straws Is Becoming Good for Business
Editor's Note: A previous version of this article stated that McDonald's plans to eliminate plastic straws globally by 2025. This version has been corrected to accurately reflect the company's goal, which is to "source 100% of guest packaging from renewable, recycled, or certified sources" by that date. The Fool regrets the error.
There was a time when most fast-food chains used plastic foam packaging. In the early 1990s, however, the public started realizing the environmental harm of this material and began to push back.
That forced restaurants to find other materials to keep your hamburgers and chicken nuggets hot. Not all plastic foam was eliminated (the material was still widely used in some cups, though that is also being phased out now). But it was largely replaced because chains risked customer boycotts if they did not act.
Now, more and more chains -- including McDonald's (NYSE: MCD) and Starbucks (NASDAQ: SBUX) -- are becoming proactive when it comes to the latest environmental backlash, against the use of plastic straws.
Plastic straws are causing a stir. Image source: Getty Images.
What is happening?
Environmental concerns have increasingly impacted business practices in recent years. The most notable example might be Keurig Dr Pepper, which faced severe pressure over the waste caused by its single-use K-Cup coffee pods. That pressure led to the company's pledge to make all its K-Cups recyclable by 2020.
McDonald's and Starbucks are somewhat ahead of the curve when it comes to taking action. Some cities including New York and Seattle have either banned or are considering banning plastic straws.
"The straw stays in our environment without decomposing for hundreds of years," New York City Councilman Rafael Espinal told The Daily News. "We're seeing cities across the country and the globe phasing out plastic straws, and it has no impact on the consumer or small business."
McDonald's has begun dealing with the issue globally. It has already started eliminating plastic straws in the United Kingdom and Ireland, and will totally get rid of them in those countries by 2019. In May, however, McDonald's shareholders voted against a proposal to stop using plastic straws in U.S. locations. The company has a stated goal to "to source 100% of guest packaging from renewable, recycled, or certified sources by 2025 and to have guest packaging recycling in all restaurants globally," according to a press release, but has not specifically addressed a plan for straws in the U.S.
“McDonald’s is committed to using our scale for good and working to find sustainable solutions for plastic straws globally,” said Francesca DeBiase, executive vice president, global supply chain and sustainability. “In addition to the exciting news from the UK today, we are testing straw alternatives in other countries to provide the best experience for our customers. We hope this work will support industry wide change and bring sustainable solutions to scale.”
Starbucks plans to get rid of plastic straws in its 28,000 company-owned stores by 2020. It will begin rolling out strawless lids and alternative-material, environmentally-friendly straws in Seattle in the fall, with the rest of the country following in 2019. The company expects that its efforts will get rid of more than one billion plastic straws each year.
Nicholas Mallos, director of Ocean Conservancy's Trash Free Seas program, said in a press release: "Starbucks' decision to phase out single-use plastic straws is a shining example of the important role that companies can play in stemming the tide of ocean plastic. With eight million metric tons of plastic entering the ocean every year, we cannot afford to let industry sit on the sidelines, and we are grateful for Starbucks' leadership in this space."
This is smart business
Neither Starbucks nor McDonald's is in the plastic straw business. It would be foolish to risk customer backlash to protect something that consumers are turning against and that can easily be replaced.
Both chains may be making environmentally friendly decisions for the right reasons, but neither is oblivious to the public relations angle. Starbucks, in being aggressive about eliminating plastic straws, appears to be adapting more out of actual concern for the damage plastic causes. McDonald's slow rollout suggests it's more worried about optics.
Still, even if you doubt their motives, action from large companies will almost certainly lead their rivals to do the same thing. This may be corporate activism due to self-interest, but the end result will be the same.
Getting rid of plastic straws is a public relations move that's good for business. Starbucks is building goodwill by being ahead of the pack on this issue on a global scale, and the companies that follow will likely receive diminishing returns when it comes to a consumer goodwill boost.
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Daniel B. Kline has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Starbucks. The Motley Fool has a disclosure policy.
