What is the cost difference between the cornstarch cups Ted’s uses and Styrofoam?

Bazor: Our cups cost us 12 cents a piece for the 20 ounce, 13 or 14 cents a piece for the 32 ounce. They’re probably three times more expensive.

McKerrow: That’s logoed and painted. It’s more expensive, but you build that into the profitability. Let’s be honest: You’re putting Coca-Cola or a glass of ice tea in there. Those are the highest profit items in every restaurant. So, yes, you are cutting your margin. The drink you’re charging $2.50 for costs you 25 cents with the cup instead of 15 cents.

It’s like the grease extraction. We’re working a deal now where they’re going to give us one of those vacuum systems where we just put the grease in there and they come haul it off—and pay us for it.

I understand the small guy, but, particularly if you’re a franchisee, there can be a co-op built up. The company goes to the manufacturer of cornstarch cups, paper straws, recyclable to-go materials and says, “We’re going to buy this systemwide,” and negotiates a good price.

Yeah, if you own three Subways and go out and try to buy those materials just for your needs, you’re going to pay through the nose for them. But if Subway with 30,000 stores negotiated a deal directly with the manufacturer and then made it available and required, you’d find that the price is very, very competitive.

Those types of negotiations make sense when it comes to lighting and floors, but why would Subway make that effort for cups? Paper cups work fine and are already cheap.

McKerrow: If a company doesn’t feel a responsibility to help future generations and the environment with cleaner air, cleaner water, and less garbage then none of this makes any sense. That has to be the foundation of your reason behind it. You have to be worried about sustainability and the future health of the planet first in order to be willing to look at these alternatives. Because sometimes it takes a lot of work just to find them, and oftentimes it takes a little bit of money.

But what I maintain is our costs to operate our business are competitive because we price everything to cover the fact that we spend a little more on certain things that we think are important.

If you don’t have that conscience, then, yeah, go out and buy the cheapest, most readily available products on the marketplace. But buying energy-efficient equipment saves you money over the life of the equipment. Buying these light bulbs gave us a real return on investment. We made a quarter of a million dollars in profit. So maybe that offsets that we spent more on paper straws.

Bazor: At the very least, it kept up with the increases in the cost of electricity. You might not realize the money savings, but you didn’t get the increase. If we can just keep with inflation, we’re doing great.

McKerrow: I don’t care who you are: We’re talking pennies here. You can always say it costs more, but there is a hidden part. The consumer more and more is wanting to purchase goods and services from a company with a conscience that’s making an effort.

Yes, some of its marketing. The consumer buys what’s hip, what’s in, what’s now. If you can drive business into your retail business because you have a conscience about sustainability and recyclable materials and you do the right thing for the environment, then that’s fine. If you can say, “We’re not going to serve bottled water; we’re going to have filtered water in our restaurants,” (and yes, filters cost a lot of money), you’re doing the right thing. And if that enhances your reputation as a company as a place of choice for people to spend their money, then why wouldn’t you do that? Is it all bad to say it’s helping me drive my business? I don’t think so.

McDonald’s went off the Styrofoam to cardboard containers years ago, and it cost more money. Styrofoam is cheaper for them, but they knew it was the right thing to do. It’s a conscienceness.

Without that conscienceness, you could always say it’s not worth the time, money, and energy. But I say we have to change that by talking about things you can really do. If nothing else, why wouldn’t you change your light bulbs? Why wouldn’t everybody in the United States?

Around here we turn off the lights everywhere. We work in the dark. It’s a matter of conscienceness.

But how do we make it financially feasible in the short-term?

McKerrow: You have to have an open mind and a willingness to explore. You also have to have a willingness to take some risks. And you have to do some work. If you are willing to do those things, there is a way to find in your unique situation a way for it not to be cost-prohibitive.

In reality, the net gain to us is that we cover an awful lot of our excess costs that we spend on Spudware and to-go cups by energy savings, cost-to-build savings, electrical savings. If you put it all into a bucket, you’re not really off balance with what the net costs to the company is. And the consumer is willing to pay a certain price for this.

The last piece is this: The fundamental laws of economics have got to take hold. Supply and demand. Organic food will become less and less expensive to the consumer, the more that consumers ask for it. It’s being grown on little five-acre, family-owned farms because they are the only people willing to take the risk. That’s why we don’t have proper pricing. If major producers become organic producers, the cost will come down for consumers and more consumers will buy it.

In which areas can Ted’s green program use strengthening?

Bazor: There are two areas, and I’m in the middle of working on one right now—chemicals. They go right into the waste water. It costs more to clean that water because of all the chemicals. We don’t know all the damage that’s happening to the ground because of what we’re soaking into it and the rivers. And we haven’t done anything about waste. We haven’t really tackled that.

I’m involved with a group here in town called the Green Foodservice Alliance. One of our initiatives is zero waste for downtown Atlanta. Our objective in the [downtown Atlanta] restaurant is to get rid of all the waste.

That isn’t going to cost us initial money, but it’s going to save us on hauling fees, the Dumpsters themselves, the clean-up surrounding the Dumpsters.