Three Critical Things Every Operation Should Benchmark

I have written again and again of the importance of benchmarking key operating statistics which will tell you far more about your operation than just how much of a profit or loss you had in any given period.  While I strongly recommend that every department benchmark in detail, here are three key things that every enterprise should begin benchmarking immediately:

  1. Payroll hours by category (regular, overtime, holiday, vacation, and sick time) by department and payroll cost by department – both by pay period.  Just the fact that this data is being reported and looked at regularly will bring down overtime costs, while pinpointing further cost saving opportunities as the ongoing norms of the operations become clearer.
  2. Utility costs by category (electricity, gas, and water).  In most hospitality operations utility expenses are second only to payroll as the most significant operating expense.  Once routinely measured and reported, a variety of energy-saving initiatives can reduce these expenses.  Utility usage rates can be compared to various measures of usage such as rooms sold, meals served and rounds of golf to establish key benchmarks.  The vagaries of weather and its impact on heating and air conditioning can be removed by comparing electricity and/or gas usage to degree days for each heating and cooling period.
  3. Major revenues, number of transactions (rooms sold, meal counts, retail transactions), and average customer/guest/member spend by revenue category and profit center.  Taken together these measures will pinpoint whether shortfalls in revenues are caused by declines in volume (# of transactions) or by the average customer spend.  Since the steps to overcome these deficiencies are different, knowing whether the problem is volume decline or lower average spend is critical to turning the situation around.

There are many other key numbers to benchmark in club operations, but these three should be the starting point for implementing a larger discipline of benchmarking.  Remember the words of William Thomson, Lord Kelvin “If you cannot measure it, you cannot improve it.”

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

Thanks and have a great day!

Ed Rehkopf

This weekly blog comments on and discusses the hospitality 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  hospitality managers throughout the country and around the world.

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