Modern society requires that the food industry reconsider packaging and evolve towards sustainable alternatives. The paper's aim is to present the special endogenous factors characteristic of SME (Small and medium-sized enterprises) family business decision-making in relation to capacity expansion. The efforts of ten SME family businesses in the Hungarian food industry related to packaging materials are presented through a case study, in-depth interviews, and cost analysis. The results show that all participants in the food chain realized that making packaging materials recyclable is essential for sustainable development. To this end, packaging material manufacturers have started to develop and now offer many alternatives of environmentally friendly and recyclable packaging materials for food industry companies. It is an important aspect for food industry companies that these environmentally friendly packaging materials have the same freshness-keeping capabilities as the previous ones. In many cases, the new environmentally friendly packaging materials require the purchase of new machines, and the new machines require the training of the workers. It can be concluded that there is a close connection between recyclable packaging and capacity expansion: the use of environmentally friendly recyclable packaging materials becomes a process of capacity expansion in the case of SME family businesses in the Hungarian food industry as well.