cloth. I just throw them into the washer after a meal and they sit in there until the next load of laundry is washed.
I know the paper ones are cheap, but my kids could easly go thru a package of 300 in less than a week.
I probably have 40-50 cloth napkins total, plus some holiday ones that I received as gifts. The napkins for everyday use sit in a copper wire basket in the center of our table
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