Packaging comprises around 40% of global plastics consumption. Because the world's rivers and lakes and especially its oceans are heavily polluted with plastics, society is pressing the industry to make more sustainable products. Coffee is consumed in large amounts, and the plastic coffee cup is an eye-catching example in many discussions of plastic waste. Therefore, it would be a nice idea to kill two birds with one stone by using recycled coffee grounds in producing the cups; furthermore, it would be a step towards the circular economy. This paper presents a new technology for using spent coffee grounds in a polystyrene compound for thermoforming vending coffee cups. The technology uses water-assisted compounding to produce the composite in a co-rotating twin-screw extruder, the standard machine for plastics compounding. Injection-moulded tensile-testing bars were produced for evaluating the material properties. The fracture surface was analysed by optical microscopy and scanning electron microscopy in order to determine the size of the particles and the quality of their bonding to the matrix. The new compound fulfilled the specifications. The proof of concept was demonstrated in a production test on a high performance line. This produced three-layered coffee cups, the middle layer filled with 10% spent coffee grounds instead of a mineral filler.