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The Disney Refillable Mug Debacle

Three things you don't discuss in polite company: religion, politics, and Disney refillable mugs. In an effort to squeeze profit from every sugary drop of soda, Disney is testing a new system to limit your liquids. Jeff Heimbuch has an analysis.

- by Jeff Heimbuch, August 5, 2011

I know everyone is talking about it, so I thought I'd throw in my two cents.

For those of you living under the Tree of Life and who don't know the story, it goes a little like this: Disney offers refillable mugs to their Guests staying at certain resorts. You can buy one, with the stipulation that you only use it during the length of your current stay. Disney puts you on the honor system, trusting its Guests to follow that one easy rule, and hoping everything is right in the world.

But some folks don't play nice. They bring that mug back again. And again. And then again after that. Soon, the mug they bought in 2006 is looking awfully old school next to the brand spanking new ones from 2011 held by more ethical Guests.

The Soda Police

So what does Disney do? Well, like any business, they're putting a stop to it. They are testing a system at the All-Star Sports Resort which will limit the number of refills you can get using RFID (Radio Frequency IDentification) technology. Each mug will have a RFID chip embedded in it to keep track of your refills. When you get a refill, the drink dispensing machine will read the RFID chip and determine if you are eligible. If not, then no drink for you. Further, if you have gotten a refill with that cup in the last five minutes, then again, no drink for you.

If you answer me these questions three, ere the other side you see... but you still will not get a drink.

You CAN, however, get water and ice. But that's it, buddy. No more, no less.

Don't think you folks buying a single serving cup can get away with it, either. You're just as bad off. Those cheap styrofoam cups ALSO have an RFID chip at the bottom, allowing you refills for up to one hour before the cup turns into a useless container (unless you choose to wear it as a cheap fez, which looks rather nice on some of us).

This entire debacle, of course, has gotten the Disney community into an uproar.

I Want My Refill (Damn It)

"How DARE they limit my number of refills! I bought this mug back in 1999, and I can't party like that without some Coca-Cola in my cup!"

Well, OK, maybe that isn't an ACTUAL quote, but I'm sure someone, somewhere, has said that. Probably. More than likely. But maybe just in my head.

I know what you're thinking, though. Sure, snagging a free refill with your mug from last year's trip once or twice may do no harm. What's a little free soda between old friends, right? But this issue isn't really about those people. It's about the folks who abuse the system. Yearly. About 10-12 times a day. In the grand scheme of things, a single refill of soda isn't going to break the bank. But multiple refills, every year? That's a lot of revenue lost.

Let's break it down by price.

Nickels and Dimes Add Up to a Fortune Lost

A reusable mug costs an average of $12, depending on where you get it from. Assuming that the average price of a regular, single serving cup is about $3, a mug is the equivalent of 4 drinks. The average family will probably make use of all 4 of those refills, thus paying off the mug. If purchased on the first day of their average, seven day trip, I'd even go so far as to say that they would use that mug at least once a day, getting 3 extra refills for essentially nothing. But that's a very low cost for Disney to willingly absorb for the upfront price of $12 for the mug itself.

Stick with me now, because we're about to get all Donald Duck in Mathland up in here.

Looking at attendance rates, the average number of people visiting the Walt Disney World Resort in 2009 was about 1,400,000 a week. Let's go out on a limb and say that 1/4 of those folks bought reusable mugs. So, if 350,000 mugs were sold at $12 a "pop", that's $4,200,000 right off the bat. That's a lot of money.

Now, let's take it a step further, and say about 1/4 of those mugs sold are brought back for next year's vacation. So, 87,500 mugs are brought back, which is a loss of $1,050,000 of revenue for Disney. About a million dollars a week. Again, averaging it out, that's about 52 million dollars a year. That... is more money than I can even begin to fathom.

Taking it even further, let's talk about the number of folks who CONTINUE to bring that mug back. I'd say about 1/4 of those mugs, which is 21,875, come back to be used again and again, year after year. That's another $262,500 a week, working out to $13,650,000 a year. Over ten years (which is possible, as I've seen lots of people with mugs that old), that's $136,500,000!

So, again, what if those same mugs keep coming back, year after year? And then year after year after year after that? That money begins to add up quickly, which in turn, is a HUGE loss for Disney. Granted, I'm being VERY liberal with my numbers, and thinking that 20,000 mugs a week come back may be farfetched, but these are the type of numbers that Disney has to be looking at. At the end of the day, they are still a business, and if they are losing money, they are going to find some way to recoup that cost.

RFID to the Rescue

In comes the RFID technology. But is it worth the price Disney is paying for it?

RFID isn't anything new at Disney. In fact, they've been using it for years. Recently, however, there has been an influx of RFID through the Disney Company.

Ever been handed one of those lanyards with a red card just before you get on an attraction? You know, the ones that help determine the wait time, after you hand it to the Cast Member just before you get on the ride? That's RFID at work right there! Disney's PhotoPass card works the same way. Aboard the new Disney Dream cruise ship, Disney uses RFID in room keys to allow visitors to open their room doors, make purchases, and tons of other things as well. Recently at Disneyland, RFID chips are being sewn into Cast Member costumes to help organize and sort them.

While the RFID technology is all very similar, Disney does get different types of RFID chips from different companies. In this case, they are using ValidFill. According to their website, "ValidFill, LLC uses a patented solution to bring intelligence to beverage dispensing utilizing RFID Technology. By adding intelligence to the beverage transaction we measurably increase Food and Beverage revenue while positively affecting guest satisfaction, register throughput, shrink, and sustainability efforts. With the help of our partners, we are currently working with companies such as Royal Caribbean International, The Dollywood Company, and Osceola County Schools."

With a little bit of a 1984-like feeling, according to their site, these chips can be used to track the cup type (hot or cold), cup size, location and date of purchase, number of times it has been used, number of refills remaining, and the last time it has been used. Not only is that pretty amazing, but Disney will get some pretty interesting statistics out of the deal.

The ValidFill system will allow you about 70 seconds for each refill before cutting you off. The handy dandy screens on the dispenser inform you when your next refill is available.

While they don't include any prices on their site, further research shows that the same type of RFID chips that Disney is using for this venture cost about 7-15 cents apiece. Considering that Disney is buying them in bulk, we have to assume they are closer to the cheaper side of that range, if not even below it.

So, in the long run, after their initial investment into the system itself is paid off, Disney is spending very little per mug for RFID technology. They will be able to recoup most of their losses if they decide to implement RFID across all their Parks.

Of course, people are going to call foul if this happens. They always do, and already have, even though it's still only in the testing phase at All-Star Sports. However, with the way the test is going, we should assume that it will trickle out through the rest of the Parks over the next few years.

In the end, we can rightfully assume that this technology is here to stay. Within a few years, this whole debate will be forgotten, and restricted refills will be the norm. Again, Disney is a business, and a business needs to make money to survive.

While people will claim this is a classic case of Disney further alienating their customers, I do believe they are doing the right thing here. I have seen too many people abuse the reusable mugs over the years, which in turn, hurts the rest of us. Plenty of times, I've had a large family hog a soda machine at my resort so all of them can get their fill of drinks before moving on. This is a great way to not only restrict mug usage, but help the rest of us out, too.

What are your thoughts on RFID? I'd love to hear what you guys think about it!

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