Ideas and Information | Hospitality Resources International

Benchmarking is one of the most significant things a general manager can do to improve the performance of a club.  By understanding the underlying “drivers” of the operation, he or she can take action to enhance results.  As Lord Kelvin said, “If you cannot measure it, you cannot improve it.”

Here are the reasons I benchmark in detail:

1. To establish the baseline or “benchmark” of existing operational performance.

Businesses generate many variable measurements of performance.  Existing data determines the baseline performance against which all future operations will be compared.  If data has not been tracked in the past, begin by measuring existing performance and make that the benchmark.  Often past data is available, it’s just that no one has made the effort to collect, organize, and summarize it.  With a little effort baseline measures can be reconstructed from past periods.  If this is too much trouble, begin by collecting today’s data.  In a short time valid benchmarks will emerge, though usually a full year’s worth of data must be collected to account for seasonal variations in business.  In the absence of significant changes, the longer the data is tracked, the more valid it becomes as the standard for the operation and as a predictor of future activity.  But, a corollary to this is that the older the data, the less relevant it is to current operations.

2.   The benchmark performance can be considered the operating standard and all future performance can be compared to it.

Once the operating standard has been established, all future performance is compared to it.  “Out of line” benchmarks become warning indicators that something demands closer scrutiny.  Often there are valid reasons for out of line numbers, perhaps the benchmark is a true anomaly that will correct itself in future periods, or it may be the start of a trend that bears management consideration and decision.  In any case, by monitoring the benchmarks, managers are aware of changes in their business and will be prepared to take action as warranted.

3. After tracking operating statistics for a sufficient period of time to ensure a statistically sound sample, benchmarks can be used to establish performance goals for future operating periods.

When establishing budgets, management can use historical benchmarks to establish realistic and accurate goals for coming operating periods.  Once goals are established they can be used to compare to actual performance day by day, week by week, and month by month to measure progress toward overall objectives.  Should actual performance fall short of expectations, management can make timely interventions to get the operation back on track.

4. It is useful to compare an operation’s performance measures for a given period to other past periods, to other similar operations, or to the industry as a whole.

For example, comparing September of this year to September of last year or this year’s Mother’s Day brunch to all previous years’.  In large, multi-unit, restaurant companies, one restaurant is compared to all others of a similar kind by use of benchmarks.  There are also national trade associations and certain accounting firms that publish annual performance comparisons of various types of restaurants on a nationwide or regional basis.  It’s a good exercise to compare an operation’s performance with the national average for similar types of facilities.

5. Identifying under-performance or best practices.

Hopefully, comparisons with previous periods or other similar operations will be for the better, but if not, it will alert management to problems and possible solutions.  By monitoring the operation’s continuing performance measures and closely analyzing the circumstances that lead to extraordinary performance, a department head can identify best practices – those actions, conditions and practices that optimize efficiency and profitability.  In the case of downward trends, it can alert management to necessary interventions.

6. Benchmarks from past periods can make budgeting for future periods easier and far more accurate.

Absent major change, the best predictor of the future is the record of the past.

7. Revenue benchmarks from previous periods aid in forecasting business levels in future periods.

Accurate forecasting of future business allows managers to properly staff their operations and schedule appropriately for expected levels of business.  This, in turn, helps control payroll cost while ensuring service to members.

8. Tracking revenues and comparing them to historical benchmarks allows management to measure member response to products/services and new initiatives.

The most accurate indicator of member response to new initiatives such as new menus, new hours of operation, improved service training, hiring a new chef, etc., is the response seen in member patronage and buying habits.  If members traditionally spend an average of $132 per month on food, but since the new chef came on board that average has climbed to over $200 per month, management could feel comfortable that their decision to hire a new highly-paid chef was the right one.  Without the benchmark of previous operations, how would they know, except by anecdote and gut-feel?

9. While most managers have a general sense of the many variables influencing their operation, having the hard numbers and statistics supports the validity of decisions, proposed changes in the operation, and requests for additional resources.

Careful tracking and analysis of performance measures is the basis for sound decision-making and is extremely useful in proposing changes in the operation.  Proposals for capital purchases have a better chance for success when supported by details and analysis.  Further, there is no better way to manage the boss than with timely reports about the challenges and progress of the operation.

10. Benchmarks can be used to establish performance parameters for bonus and other incentive programs.

When goals are established based upon historical benchmarks, the ongoing performance measures can be used to determine eligibility and extent of bonus payments and other forms of incentive programs.

11.   The few minutes spent each day in recording and reviewing key operating statistics make a manager intimately familiar with the rhythms and flow of his operation.

Over time this develops into what can readily be called an intuitive understanding of the essential aspects of the business.  As a result a department head is able to foresee and prepare for expected variations in the business, such as traditionally slow and busy periods; doing this will ensure keeping costs in check while maintaining high levels of service.

12.   A significant reason for benchmarking is that it establishes the condition of the operation upon a new manager’s arrival and gives him a graphic demonstration of the many operational improvements under his leadership.

This is most helpful in gaining the trust and confidence of bosses, peers, and employees alike.  Coincidentally, it also makes it easier to justify increased compensation for job performance.

Note:  Club Resources International has developed benchmarking spreadsheets for all areas of club operations.  The Excel files can be downloaded and customized for your operations.  You can find them here.

Thanks and have a great day!

Ed Rehkopf

This weekly blog comments on and discusses the club industry and its challenges. From time to time, we will feature guest bloggers — those managers and industry experts who have something of interest to say to all of us. We also welcome feedback and comment upon the blog, hoping that it will become a useful sounding board for what’s on the minds of hardworking club managers throughout the country and around the world.

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