Yes, they replaced food packaging that was recyclable with paper-based packaging that is not recyclable. I worked there before the transition, occasionaly we'd get an irate customer complaining about the styrofoam and we'd try to explain that it was more recyclable than using paper but most would refuse to hear it.

That said, at the store I worked at, the only things that actually got recycled were the cardboard boxes from the stockroom, and the oil from the fryers. Everything else went into the dumpster.