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Forget Industry Averages

by Ken Vincent, Featured Contributor

I SEE many posts on various Linkedin Groups asking about industry averages.  Almost every association in every industry has benchmark averages for all kinds of data.  However, as a measuring tool for a given business I would argue that they are not only useless, but can be very detrimental.

I see posts asking how much a sales person should sell in a retail outlet to be considered good.

Opinion Yours CountsHow much should a real estate agent sell to stay above the cut line.

Questions about what a restaurant’s food cost % should be in a family style restaurant.

What should the cost be to service an occupied hotel room.

You can’t take the cost to service an occupied hotel room in Meridian, Miss and that of a hotel in Chicago with a union contract, blend them and say that is what your hotel in Atlanta, Ga. should shoot for.

The industry average food cost of a family style restaurant is totally meaningless.  If you want to know what your food cost should be, cost out your menus, factor in the mix of sales and that should be your target, not some industry average that blends all kinds of facilities, in many different markets, and with different ownership objectives.

Managers asking about industry averages and benchmarks obviously don’t know how to measure and quantify their business.  Forget industry averages, there is no such thing as an “average” business, so what are you trying to measure against?

What should the labor cost be in a gift shop in Knoxville, Tennessee?  I don’t have a clue, but the owner/manager of that shop should know and industry averages won’t answer the question any more than I can.

Do you use industry averages as a measuring tool for your business?  If so, what do you feel they really tell you?


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Ken Vincent
Ken Vincenthttp://sbpra.com/KennethVincent/
KEN is a 46 year veteran hotelier and entrepreneur. Formerly owned two hotels, an advertising agency, a wholesale tour company, a POS company, a leasing company, and a hotel management company. The hotels included chain owned, franchises, and independents. They ranged in type from small luxury inns, to limited service properties, to large convention hotels and resorts. After retiring he authored a book, “So Many Hotels, So Little Time” in which he relates what life is like behind the scenes for a hotel manager. Ken operated more that 100 hotels and resorts in the US and Caribbean and formed eight companies. He is a firm believer that senior management should share their knowledge and experience with the next generation of management.

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