Boston Tea Party, the first coffee chain to ban single-use cups, has seen its sales drop 25% since implementing the measure.
The independent chain, which has 21 stores across the UK, introduced the ban in June 2018 and saw its sales of hot takeaway drinks fall from £1 million to £750,000.
Boston Tea Party's owner, Sam Roberts, said: "We have lost around 25% of our takeaway coffee sales but we modelled that into our costs as passing trade who don't want to get involved in the cup loan scheme."
He said that the ban had stopped 125,000 single-use cups going to landfill, led to sales of 40,000 reusable cups, and raised £12,000 for local charities.
While many small business owners would consider a 25% fall in sales a disaster, Mr Roberts stressed it "was a financial loss we had to take", adding "we want this to be a call to action to other companies".
Most of the big coffee chains operate a small discount, typically 25p, off hot drinks when using a reusable cup. But Mr Roberts said it isn't enough: "We know first-hand this has a very low penetration and when we launched that scheme ourselves, only 5% of customers took it up.
"There's too many operators not dealing with the problem and putting their profits before the planet."
He added: "At the moment bigger businesses are deploying a smoke and mirrors strategy and not resolving problems while seeming like they are doing something about it.
"We are 100% committed and there's no going back."
Rebecca Burgess, chief executive of plastic pollution campaign group City to Sea, praised Boston Tea Party's policy and called on bigger players and government to take greater action.
She said: "The evidence is clear that levies are effective in changing throw-away behaviour.
"While we celebrate any steps taken by retailers to reduce their use of single-use plastics, the discounts currently offered by chains for bringing in their own reusable coffee cup aren't enough to address this growing issue."
