Switching laundry suppliers saved one Avendra client almost $75,000 a year

Dorian Murphy went to a property meeting in Chicago to talk about glassware and operating supplies with the hotel's executive team. Instead the executive chef and the director of food and beverage spent fifteen minutes arguing over how spreadable the salted butter was at breakfast, with the general manager and the director of engineering in the room. Murphy, Director of Strategic Luxury Accounts at Avendra International, had eaten that breakfast and sided with the food and beverage director.

Speaking on a MarketScale-produced episode of Meet in the Lobby, the Avendra International podcast Murphy co-hosts with Melissa McCormack, the two take listener questions from ownership groups, management companies and property leaders who are being asked to take cost out of hotels that will debate butter at the executive table. McCormack's first answer sets the scale. An Avendra client is saving almost $75,000 a year after moving to a different outsourced laundry supplier.

The question is landing now, Murphy says, because of tariffs coming on and off, and the contract surveys agree with him. In a May 2025 survey of 300 C-suite executives, KPMG found 51% renegotiating supplier contracts in response to the new US tariffs, rising to 77% in consumer goods. McCormack adds her own marker of the moment: the World Cup, and the hotel worker she read about who found fans stranded in a downpour and drove them to the match.

The KPMG survey also complicates the episode's framing. It shows renegotiation in 2025 as a defensive response to a tariff, which is a different thing from the standing discipline the two hosts describe. Murphy does not separate them: the advice he is giving luxury brands on the Avendra program because of the tariffs is the same advice he gives friends managing brands off it.

Elevator and landscaping contracts are where Murphy starts

Murphy's answer to what an operator can change this week is to reopen the service agreements the property already pays for. A group purchasing organization, or GPO, pools the purchasing volume of many member properties and negotiates supplier contracts against that combined volume, so one hotel buys at a price normally reserved for a chain. Avendra is one, and Murphy's point is that the contracts most operators forget to run through a GPO are the service ones.

The mechanism behind a GPO discount is tiered pricing, meaning a distributor's price drops in steps as a buyer's annual volume rises. Reeco, a hospitality procurement software company, wrote in an August 2025 guide on its own site that a 150-room hotel spending $800,000 a year on food and beverage might get 8% off list negotiating alone, while the same hotel inside a GPO of 500 properties rides on $400 million of collective volume and reaches the tier a distributor would otherwise reserve for buyers spending $5 million or more. Reeco puts that tier at 18% off list.

Reeco sizes the result at $30,000 to $50,000 a year for a typical 200-room hotel, prices national GPO membership at $2,000 to $8,000 a year, and lists Avendra as the largest hospitality GPO at more than 14,000 properties with Entegra Procurement Services at more than 15,000 locations. No association or regulator publishes a contract-by-contract comparison of the hospitality programs. Set McCormack's laundry example against Reeco's range and the scale of a single service contract is clear: one laundry agreement moved more than Reeco's estimate for an entire property's annual GPO savings.

Centerpoint Group, a horizontal GPO that contracts for indirect categories across many industries, writes on its own site that vertical GPOs such as Avendra and Foodbuy grew out of food distribution and contract for the categories that define hospitality: food, beverage and furnishings. Maintenance and repair supplies, janitorial services, IT and telecom are left for each property to buy on its own, by Centerpoint's account. Murphy's vendor list, at least in the episode, already reaches past the kitchen: elevator service, landscaping and uniform rental all come up as contracts with prenegotiated pricing.

Murphy's second move is aggregation. He says hotel brands with a portfolio of properties let each hotel sign its own local or regional uniform rental vendor for culinary, engineering and housekeeping when a national or international contract would cover all of them. A supplier that understands the totality of the business at stake, he says, is easier to hold to a higher service standard than one serving a single hotel.

A pay-for-performance clause prices every line of the scope

McCormack adds a term that changes how the supplier gets paid rather than how much.

The scope of work in a service contract is the list of what the supplier owes: the visits, the response times, the deliverables. The clause attaches a dollar value to each line at signing, and a missed line comes off the invoice at that value. Because both sides fixed the amount in advance, there is nothing to argue about after the miss.

No public standard sets a value for each line of an elevator or landscaping scope, so the values are negotiated contract by contract. Murphy widens the lens past the invoice. Directors of finance and corporate leaders talk about price savings as the money that flows to profit, he says, but a portfolio-wide renegotiation can also carry marketing funds, additional rebates, meaning money a supplier pays back after the purchase, and insurance and indemnity terms that never appear on an invoice.

McCormack's word for it is balance. The beauty, she says, lies within the terms of the contract.

Menus without dollar signs lifted checks 8% in a Cornell trial

McCormack moves closer to the microphone for the second lever, and her first instruction is typographical. Take the currency indicators off the menu, she says, because the number 32 reads differently from $32 and a diner who is not reminded of the price is willing to spend more. Murphy, who has helped engineer menus, had not heard it before; his reading is that removing the symbol turns currency into play money, so a diner focuses on what they want instead of what it costs.

The claim rests on a controlled trial. In December 2009 the Cornell Chronicle reported a study by Sybil Yang and Sheryl Kimes of the Cornell School of Hotel Administration, with Mauro Sessarego of the Culinary Institute of America, published in the International Journal of Hospitality Management, in which 201 diners at a Culinary Institute cafe were randomly given one of three menus showing prices as $20, as 20, or as twenty dollars. Diners who got the bare numerals spent $5.55 more on average, about 8%.

Two details in that study bound the lever. Spelling the price out in words performed no better than the dollar sign; Kimes's explanation, as the Chronicle reported it, is that any reference to dollars reminds a diner of the pain of paying. Yang cautioned that the yield is modest and the appeal is that the change costs almost nothing and carries almost no downside, which for an operator is the honest sizing: a free format change worth a few percent on the check.

Business Insider, in a July 2014 survey of the research, added the description side. It reported University of Illinois at Urbana-Champaign research in which descriptive menu labels raised sales 27% over the same items without descriptors, and noted that prices ending in .95 test as friendlier than .99 while most restaurants drop the cents entirely. Cayuga Hospitality Consultants, in an October 2024 post on its own site, agrees on the cents and adds a caveat that matters for the luxury properties Murphy serves: in upscale settings, whole numbers may read as more premium.

The second-cheapest slot is where McCormack packs the margin

McCormack's next instruction concerns where a diner's eye lands and what it does when it gets there. On a two-page menu, she says, the first place diners look is the top right corner; on a single page it is the center, and that is where the most profitable items belong. Cayuga's October 2024 post places high-margin items in the top right or in the first and last positions of each section.

A price column is a scanning problem. Studies, McCormack says, show diners run down the column and pick the second least expensive or a midrange item, on wine lists as much as food menus. Her fix has two versions: pack the margin into that second-lowest slot, or drop the column and put the price after each description so the diner has to read the food to find the price.

Murphy draws the mirror image from the top of the column. Diners want the best thing on the menu, he says, then talk themselves out of the most expensive item precisely because it is the most expensive, which makes the next item down the place to pack margin. Business Insider's 2014 piece reported the same tactic from menu engineer Greg Rapp, who described very expensive dishes as decoys the diner will not buy that make the rest of the menu look reasonable, and from author William Poundstone, whose example was a three-digit platter whose job is to flatter the prices around it.

The evidence behind these two effects is of a different grade from the dollar-sign study. The Cornell trial randomized menus across real diners; the decoy and second-cheapest effects, in the sources on the subject, are practitioner accounts of what works on clients' menus.

Specials are the other place McCormack puts margin, and she has a figure for it.

The upsell comes from the floor, so the special pays only when servers are selling it. Murphy adds that the special is also where a kitchen moves excess inventory before it becomes waste.

Menu engineering ranks by margin, and only 40% of restaurants use it

Everything McCormack describes sits inside a discipline with a name and a date. Menu engineering, according to an April 2025 explainer by Michael Kasavana for the American Hotel & Lodging Educational Institute (AHLEI), was developed by Kasavana and Donald Smith at Michigan State University around 1982, and its founding argument is that the oldest misconception in food service is that a low food cost percentage means a profitable restaurant. Food cost percentage divides what the ingredients cost by what the dish sells for; menu engineering ranks dishes instead by contribution margin, the dollars each sale leaves after its direct cost, and by menu mix, how often each item sells.

The costing step comes first. Kasavana writes that an operator costs every item on the menu, including wasted product, the labor to prepare and plate it, condiments and packaging, before ranking it on the two axes. Those axes produce four boxes, which Cayuga's post lays out: stars, popular and profitable; plowhorses, popular but thin; puzzles, profitable but slow; and dogs, neither.

Kasavana's warning is that the items with the highest gross profit are usually the higher-priced ones with a higher food cost percentage, so an operator who promotes low-food-cost items ends up pushing the cheap dishes and lowering both the average check and the gross profit. He also reports that only about 40% of restaurants say they use the method, four decades on.

The scale of what the method can do has a published case behind it. Cayuga, in its October 2024 post, cites a Cornell School of Hotel Administration study that examined the effect of menu engineering on one restaurant's profitability and found a 10% increase in sales after the restaurant promoted high-margin items, cut low performers and redesigned the menu. That is a sales lift achieved without the price increases McCormack is trying to help operators avoid.

Murphy's version of the dog box is personal. The items to cut, he says, are the ones carrying the chef's emotional investment that are not making money: the dish with the house special sauce that is not moving, replaced with something high margin or not replaced at all. He also walks into luxury and upscale restaurants and finds two-page menus that should be one page of greatest hits, and McCormack agrees on the reason: too many options paralyze a diner.

McCormack's cost list starts before design. Use seasonal items because they are fresher and cheaper, cross-utilize ingredients across dishes to cut waste, and read the commodity outlooks that produce suppliers and broadline distributors, the full-range food and supply houses, already publish. Costs will rise while menu prices sit still, she says, so a stagnant menu stops earning.

Chinese New Year sent a banquet's coffee mugs to Australia

Asked for the most questionable cost-saving tactic he has seen, Murphy tells a story from a hotel he worked at many years ago. Before a large banquet for a high-paying, high-expectation client, a banquet server tripped over his own shoes and sent a tower of twenty racks of coffee mugs to the floor, taking out a sizable share of the mugs needed for the room. The team got through the event, but replacing the mugs meant going back to the original manufacturer in China just as Chinese New Year was shutting factories down.

Instead of renting, the hotel bought a knockoff version from an Australian vendor. The part Murphy calls questionable is that the hotel never went back to the Chinese supplier once the factories reopened, because the Australian deal was too good. McCormack's reading is that it is the same creativity operators had to find during the pandemic.

In Murphy's story the second source was an accident; in 2025 it is a plan. KPMG's May 2025 survey found 46% of the executives it polled shifting to domestic sourcing and production and 18% relocating or combining production facilities, with retail the sector most able to make a major supply chain change within one to two months. McCormack's lesson is the small version: it takes creativity, and the second supplier can turn out to be the better deal.

The next episode turns to labor and revenue generation. Before then, the test McCormack sets is to know what moves on the menu and what does not, and to be willing to change it. Murphy's timeline for the service contracts is shorter: reopen them, he says, like yesterday.