Amtrak Food Service Lost $834 Million in 10 Years

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amtrakwolverine

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Amtrak lost $84.5 million selling food and beverages last year and $833.8 million over 10 years, House Transportation and Infrastructure Chairman John Mica said, calling for a “better way” to run those operations.
http://www.bloomberg...-mica-says.html

Yeah what better way do you have in mind. get rid of food service all together? Cut even more food staff? Only serve peanuts?
Maybe increasing the prices is the only way to reduce losses with food. Then again, many people easting in diners are Sleeper pax, who do not pay for their food.
 
Well, there is no Free Lunch! When you pay several Hundreds of Dollars, if not over $1,000, for a Room on an LD Train you ARE paying for your Food!

Perhaps Amtrak should run the Food Service Like most Resturants, Pay the Chef and the LSA a Liveable Wage and Pay everyone else $2.10 an Hour + Tips like they do Food Service people here in Texas! Yeah, that's the ticket! Isnt Private Enterprise Wonderful! While they're at it might want to get rid of the Coach Attendants and the AC and the Sleeprs too which will allow them to lay off the SCAs and they could put Vending Machines in and get rid of the Cafe Attendants also! And break the Unions , that will save Lots of Money!

Greyhound and Mega Bus don't have any staff except a Driver, maybe we could get rid of the Conductor too and just let the Highly Paid Engineer do everything! That ought to Save a Bundle! :rolleyes:

If the Idiots in Congress that push this Crap were any stupider we could just eliminate ALL Public Transportation since that seems to be the Wing Nuts Mantra now-a-days! :wacko:

Sarcasm intended! <_<
 
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Well, there is no Free Lunch! When you pay several Hundreds of Dollars, if not over $1,000, for a Room on an LD Train you ARE paying for your Food!
Apparently, not paying enough. Maybe the sleeper fares don't account for food costs at all, it was added in 1985.
 
Apparently, not paying enough. Maybe the sleeper fares don't account for food costs at all, it was added in 1985.
Also there is the pay one price then order the most expensive bias.

Most sleeper passengers will zero in on the higher priced steaks, seafood, and chicken. Very few will settle for the cheaper salads, hamburgers, etc. This bias towards ordering the more desireable items raises variable costs while the fixed payment in the form of a sleeping car ticket markup might not be working in paying the piper.
 
"Amtrak Food Service Lost $xxx Million"? I would like know how much highways lost in the same period?

[slaps hand on head] That's right - we taxpayers do not subsidize highways at all!
rolleyes.gif
It's free!
laugh.gif
 
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I really dread the AmChow- by the second day I'd rather be eating pretzels in my room. And on a recent CZ trip the dining car was so dysfunctional it took almost 2 hours to get dinner and get out, with only half the tables full. And the LSA was griping over the PA that he wanted more sleeper passengers to come in. The last day I ate my own snacks and used the lounge car. I'm sure that the process could be streamlined a little bit but I don't want to have to eat Subway chain turkey products either.
 
Also there is the pay one price then order the most expensive bias.

Most sleeper passengers will zero in on the higher priced steaks, seafood, and chicken. Very few will settle for the cheaper salads, hamburgers, etc. This bias towards ordering the more desireable items raises variable costs while the fixed payment in the form of a sleeping car ticket markup might not be working in paying the piper.
To eliminate this, maybe Amtrak can streamline food service like airlines. Offer only one combination to everyone. If its gonna be steak, then steak for everyone. If chicken, then chicken for everyone. And like the airlines, if you have special needs, like vegetarian, gluten free etc, ask the passengers to choose special meals at the time of booking and only load vegetarian etc dishes if someone has asked for it. This solves the problem of "free" sleeper passenger being greedy and ordering the most expensive items. Now how do we take care of paying coach passengers? Again, look at LCC airlines. Let the passengers pay for their meal while booking if they plan to eat on the train. If they show up in the Diner unannounced, charge them higher and offer only what's available. You can't be choosers then.
 
Maybe Amtrak should change how it buys its food....paying $3.40 for a can of Pepsi that they sell for $2.00? Sounds like someone (or several someones) 9s getting rich off the commissary-supply deal, at OUR (taxpayers) expense.

Sounds mobbed up, imho.
 
Ok, so by whatever accounting procedures and rules that were applied (which is anything but simple), Amtrak lost $834 million in Food & Beverage (F&B) sales over 10 years. To put that into perspective, adding up the ticket revenue numbers for the past 10 fiscal years, FY2002 through FY2011, if my numbers are correct, Amtrak took in $14.7 billion in ticket revenue. That does not include F&B sales which were $191.1 million in FY2011. Adding up losses over 10 years makes them sound worse than they are.

Still, Amtrak needs to reduce F&B losses as much as they can while also not hurting ticket revenue. Electronic Point of Sale systems are being deployed which should cut costs by eliminating a lot of manual record keeping, provide better tracking of inventory, keep the café and food cars open longer (if the OBS cooperates). Of course, electronic POS systems are simply catching up to what the retail food chains implemented many years ago. The PRIIA Section 222 report issued last year also lists Improved Food Service Menus as approaches they are trying to generated more revenue and thus reduce losses. Maybe we will see better cost recovery for F&B sales in FY13 and FY14 if these efforts help.

I'm curious about whether the airlines make or lose money on food & beverage sales? I think if the US domestic airlines made a profit on on-board food sales, we would be able to buy a better range of food on domestic flights of more than an hour. That the airlines have so drastically slashed on-board food and beverage choices for short to medium range flights (in general), even when the passengers pay for it, says to me, that F&B sales are not a profit center for the airlines either.
 
Maybe Amtrak should change how it buys its food....paying $3.40 for a can of Pepsi that they sell for $2.00? Sounds like someone (or several someones) 9s getting rich off the commissary-supply deal, at OUR (taxpayers) expense.

Sounds mobbed up, imho.
Amtrak is NOT paying $3.40 for a can of Pepsi. The $3.40 is the fully loaded cost of selling that can of Pepsi - the food service attendant, stocking the train, inventory tracking, perhaps even the cost of the café car, and probably a slew of other costs.
 
Maybe Amtrak should change how it buys its food....paying $3.40 for a can of Pepsi that they sell for $2.00? Sounds like someone (or several someones) 9s getting rich off the commissary-supply deal, at OUR (taxpayers) expense.

Sounds mobbed up, imho.
Amtrak is NOT paying $3.40 for a can of Pepsi. The $3.40 is the fully loaded cost of selling that can of Pepsi - the food service attendant, stocking the train, inventory tracking, perhaps even the cost of the café car, and probably a slew of other costs.
Alright, I did some work in cost accounting, so I'll throw out what is probably happening here:

-Amtrak pays X for a given amount of food in a diner or cafe over a given period. Let's say that it is $1500.

-Amtrak pays Y for the cost of OBS, car maintenance, etc. Let's say that this is $1900.

-Amtrak generates Z in revenue from the sale of those goods. Let's say this is $2000.

So, the cost of selling the goods comes to $3400 while $2000 is brought in. Thus every item sold is going to be hit with a "burden" of 1.7*sale price...and thus a soda that sells for $2 is going to generate a "cost" of $3.40.

That's one way to do it. The other way would be to base it off of the purchase price for Amtrak. In such a situation, using the numbers above, the burden rate would be 2.266..., meaning that something that cost $1.27 "off the shelf" would be burdened to $3.40 (or something that cost $2 for Amtrak to buy will "burden out" to $4.53.
 
Amtrak's food service is not meant to be profitable - it should be viewed like the food service provided by hotels, not restaurants. As former senator Trent Lott put it, "...if you wipe out food service, you might as well terminate the route. [so] don't mess with people's stomachs."
 
"Amtrak Food Service Lost $xxx Million"? I would like know how much highways lost in the same period?

[slaps hand on head] That's right - we taxpayers do not subsidize highways at all!
rolleyes.gif
It's free!
laugh.gif
I once saw that Interstate highways get over $400,000,000,000 of money from the government. Forgot the source. Now just wait for the numbers when you add up U.S., state, and county highways, and other roads.....

I really dread the AmChow- by the second day I'd rather be eating pretzels in my room. And on a recent CZ trip the dining car was so dysfunctional it took almost 2 hours to get dinner and get out, with only half the tables full. And the LSA was griping over the PA that he wanted more sleeper passengers to come in. The last day I ate my own snacks and used the lounge car. I'm sure that the process could be streamlined a little bit but I don't want to have to eat Subway chain turkey products either.
I don't see what the problem is with Amtrak food. Much better than McDonalds. What do you not like about the food?
 
Also there is the pay one price then order the most expensive bias.

Most sleeper passengers will zero in on the higher priced steaks, seafood, and chicken. Very few will settle for the cheaper salads, hamburgers, etc. This bias towards ordering the more desireable items raises variable costs while the fixed payment in the form of a sleeping car ticket markup might not be working in paying the piper.
On what basis do you claim that most sleeper passengers go for the higher-priced stuff? I don't have specific data, but my anecdotal observations are that people will read/listen to what the options are, and choose based on what they want to eat. The sleeper passengers that get their meals included probably don't even look at the price column.

For what it's worth, the chicken is usually among the lowest-priced items on the dinner menu, and I see plenty of folks ordering that.
 
To eliminate this, maybe Amtrak can streamline food service like airlines. Offer only one combination to everyone. If its gonna be steak, then steak for everyone. If chicken, then chicken for everyone. And like the airlines, if you have special needs, like vegetarian, gluten free etc, ask the passengers to choose special meals at the time of booking and only load vegetarian etc dishes if someone has asked for it. This solves the problem of "free" sleeper passenger being greedy and ordering the most expensive items. Now how do we take care of paying coach passengers? Again, look at LCC airlines. Let the passengers pay for their meal while booking if they plan to eat on the train. If they show up in the Diner unannounced, charge them higher and offer only what's available. You can't be choosers then.
There are far too many people with different tastes/dietary requirements/general preferences.

I don't know what airlines offer "steak (and only steak) for everyone." There is generally a choice of a couple options (first class, no cooked meal options at all in coach on domestic flights).

Still, Amtrak's menu offerings aren't exactly very complex, as you usually only get four or five options per meal. I can't imagine anything good coming from only offering one option.

What LCC airlines have passengers pay for their meal while booking (first, what LCCs actually offer meals)?
 
Also there is the pay one price then order the most expensive bias.

Most sleeper passengers will zero in on the higher priced steaks, seafood, and chicken. Very few will settle for the cheaper salads, hamburgers, etc. This bias towards ordering the more desireable items raises variable costs while the fixed payment in the form of a sleeping car ticket markup might not be working in paying the piper.
On what basis do you claim that most sleeper passengers go for the higher-priced stuff? I don't have specific data, but my anecdotal observations are that people will read/listen to what the options are, and choose based on what they want to eat. The sleeper passengers that get their meals included probably don't even look at the price column.

For what it's worth, the chicken is usually among the lowest-priced items on the dinner menu, and I see plenty of folks ordering that.
For my unscientific sample size of one, I've shelled out for the steak with cash at least a dozen times, and quite possibly close to twice that. But I can also confess to being an outlier in virtually every way on this front. What can I say, I like steak and Amtrak usually does it well (though preferably not well done!). Indeed the diner prices are quite reasonable, being exempt from sales/prepared foods taxes. I think I once tallied up the cost of french toast, bacon, juice/milk, and coffee on Amtrak and at IHOP, and Amtrak came out cheaper...I forget precisely what I put in on each side, but I remember Amtrak beating IHOP on a comparable meal.

I've run into some lousy meals, yes, but I've run into those at very nice restaurants as well when the chef was having a lousy evening or a disagreement with the stove. If anything, Amtrak tends to average much better than your average "causal dining" restaurant in terms of quality (I'd put it on the lower range of "fine dining" in terms of quality as a rule, and in some ways the food is preferable to "fancy" food in my mind). The food is solid, and it is a good value for your money as a rule.

The big questions in the above are, to my mind:

1) What's the breakdown on the OBS losses? i.e. How much of that is coming off of the Acelas vs. the Regionals vs. the LD trains?

2) How are FC meals (Acela), sleeper meals (LD), and BC drinks (Regionals/corridor trains) being accounted for in the mix? If Amtrak sells a million BC seats and books off a $.25 charge for a soda for each one, that's $250,000 in "lost revenue" that could either be deducted from the BC accommodation revenue or just left on the food service budget as a $0 sale. $5/meal in costs for FC on the Acela (and I think I'm using a very low price point) could easily rack up several million in uncompensated losses to food service. Ditto the sleepers (where you're probably averaging 2-3 meals per sleeper passenger; even at a low price point, that's close to 700,000 passengers times whatever your average price point per meal is times the average meals per passenger; assuming 3 meals at $5/meal times those passengers is going to give you close to $10m/year in costs).

3) What costs are being allocated to food service? No, really...how much overhead is being offloaded here by Mica et al to make things look bad? Yes, I know that some of that overhead is justified...but in this particular instance, anything outside of direct costs for running the food service is just being "fudged" onto it.

4) Finally, how much revenue is there, what are the expenses, and what does that leave as losses? My guess is that the losses, while not trivial, are still well under 50%...my best guess, based on the soda example, is that you're covering around 60% of food service costs on food service revenue...and this is potentially excluding several tens of millions in "discarded" revenue due to FC/BC/sleeper food expenses not getting paid for in cash...which would be sloppy, stupid accounting on someone's part, but I don't think we can exclude the possibility of this. This would be roughly in line with the $110m or so in revenue from food and beverage noted last year.

If the sleeper/FC/BC situation is being handled poorly, I can probably shake about $25 million/year loose in "losses" depending on meal cost assumptions; I can probably even run that higher if you bill the "losses" of the meal against the sleeper/first class/business class accommodation charges.
 
Apparently, not paying enough. Maybe the sleeper fares don't account for food costs at all, it was added in 1985.
Also there is the pay one price then order the most expensive bias.

Most sleeper passengers will zero in on the higher priced steaks, seafood, and chicken. Very few will settle for the cheaper salads, hamburgers, etc. This bias towards ordering the more desireable items raises variable costs while the fixed payment in the form of a sleeping car ticket markup might not be working in paying the piper.
Often the difference between the cheapest and most expensive item in a particular category is not that big. So I don't think this is really the problem.

Also remember that a lot of people choose to drink alcoholic beverages (which they pay for, and that means Amtrak saves money because they move less of the free stuff)

I think all in all it averages out.

Maybe sleeper fares are just too low?
 
How can any food service be expected to generate a profitable income when they are only open for 2 hours per meal, paid 12 hours per day, at a wage that is far above meager (plus the priciest on on the menu 3 times a day), then pay their room and board for a couple of nights at their end stops.
 
QUOTE FROM USA TODAY: ".......Possible solutions include using café cars instead of dining cars on long-distance routes, replacing the food and beverage service with vending machines or food service carts, and contracting out the service to the lowest bidder..........."

We know what happened on the Sunset when they put in the vending machines. Can you imagine going X country with your only choices being AmCafe food?

Anything CLOSE to this happens, and I'm off the LD trains, permanently. Let's get rid of the windows too, then we wouldn't have to pay to CLEAN them, saving even more money.
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I'd highly suggest WE ALL (regardless of political affiliation) contact Mica's office ASAP, like TODAY, and inform of your views. We all know he's got Amtrak in his gun sights, since it's an easy target. But let's make it more, er, "painful" to stage these ridiculous stunts, and outrageous quotes.
 
I'd highly suggest WE ALL (regardless of political affiliation) contact Mica's office ASAP, like TODAY, and inform of your views. We all know he's got Amtrak in his gun sights, since it's an easy target. But let's make it more, er, "painful" to stage these ridiculous stunts, and outrageous quotes.
I understand your outrage, and agree with it, but I don't think Rep. Mica will care what we think, if we aren't either constituents or donors. It probably makes more sense to contact one's own Congressman or Congresswoman.
 
How can any food service be expected to generate a profitable income when they are only open for 2 hours per meal, paid 12 hours per day, at a wage that is far above meager (plus the priciest on on the menu 3 times a day), then pay their room and board for a couple of nights at their end stops.

Wow! Exaggerate much!

Breakfast, 6:30-10:00am. Report time for breakfast is 5:30am. 5:00am for the chefs. Lunch, 11:00 or 11:30-3:00 on most trains. Barely any time to eat your own breakfast between breakfast and lunch and then be ready for lunch. Dinner, 5:00-9:00pm, which during summer months typically goes until 10:00pm. Report time for dinner is 4:00pm. Add one hour minimum for clean-up afterwards. I'm sorry but your post is just plain stupid.

Now consider the fact that these people work the whole day from 5:00-5:30am until closing time with, according to the dining car schedule about 3 hours in between meals which most of that time is eat up by cleaning up and setting up. When you do get a break and when it is time to quit, there's nowhere to go. You're still stuck on a train for two days.

At turn-around points, Amtrak pays on average, except in the more expensive cities, $75 per night for a room. I've seen CLC charges as low as $26 per night and as high as $120. Per diem is about $24 per day and it's split up into meal segments so you only get the part that applies to when you are in town. Try eating dinner, breakfast and lunch in downtown Chicago and see how far $24 goes.
 
This has been discussed to death on this forum, but it is an interesting topic.

My reading of modern passenger railroad history is this: Dining cars have always been a money-losing proposition, but they attract the public and they are one of the core traditional features of train travel. Honestly when people learn I like to travel on LD trains, it's usually around the second question they ask. I would hate to see the experience go.

Maybe there are alternatives to the dining car, such as having prepared meals served in room by the SCAs. Lose the physical dining car. Put the cafe car business out for bid, I've never been too impressed with the menu or the service there. But I'm not sure anyone would be eager to take it over.

I work for the biggest US Bank and we have a cafeteria in our building. It used to be very subsidized but it's not so much anymore, ie food inside the building costs the same as outside. It's a money-losing proposition, they have to PAY the company that runs it to do it, even with the free real estate (formerly ARA, now Restaurant Associates). The guy in charge of our building once jokingly asked if we'd take $50 a week in return for closing the cafeteria. It's quite a trick to provide good food service in inconvenient places.

You can look at what's happened to foodservice on the airlines. They have cut costs to the bone, and charge out the wazoo for a little package of cheese and crackers. I don't think the experience is transferrable. Mostly airline pax are under duress to tolerate their situation for up to six hours or so. Train travel is more of a choice.

Bring Back Fred Harvey!! :lol:

(If Rep. Mica's car was hit by an Amtrak train the judge would rule self-defense.)
 
The purpose of this hearing was not to force Amtrak into profitable food and beverage operation. It was to determine the steps Amtrak has taken to implement recommendations made last year by the Amtrak office of the Inspector General (AOIG) to reduce waste and fraud in the food and beverage operation, and also to assess the impact of Amtrak food and beverage costs on state-supported services.

A report issued last year by the AOIG identified widespread theft and fraud in Amtrak food and beverage service involving 307 LSA’s over eight years. A conservative estimate of the cost of the theft and fraud to Amtrak is between $4 and $7 million per year. The AOIG made a series of recommendations to Amtrak to reduce the problem. The hearing was to assess the steps taken by Amtrak in response to the AOIG’s report.

A second issue covered was the cost of food and beverage service being passed to states for state-supported trains. Of particular interest was the experience of the state of Maine and the Downeaster. Maine does not use Amtrak food and beverage service for the Downeaster. They independently contract the on-board food and beverage operation. There was considerable interest in the economic comparison between Maine’s use of a private food and beverage contractor verses the cost to other states for use of Amtrak-supplied food and beverage service.

As long as Amtrak depends on federal funding in order to operate their trains, Congress, which provides those funds, has every right to question how the money is being spent. When an independent investigator like the AOIG finds waste and fraud, Congress has an obligation to follow-up and review Amtrak’s response. By all accounts, Amtrak did just fine at this hearing, and the AOIG expressed general satisfaction with Amtrak’s response to last year’s report.
 
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The purpose of this hearing was not to force Amtrak into profitable food and beverage operation. It was to determine the steps Amtrak has taken to implement recommendations made last year by the Amtrak office of the Inspector General (AOIG) to reduce waste and fraud in the food and beverage operation, and also to assess the impact of Amtrak food and beverage costs on state-supported services.

A report issued last year by the AOIG identified widespread theft and fraud in Amtrak food and beverage service involving 307 LSA’s over eight years. A conservative estimate of the cost of the theft and fraud to Amtrak is between $7 and $10 million per year. The AOIG made a series of recommendations to Amtrak to reduce the problem. The hearing was to assess the steps taken by Amtrak in response to the AOIG’s report.

A second issue covered was the cost of food and beverage service being passed to states for state-supported trains. Of particular interest was the experience of the state of Maine and the Downeaster. Maine does not use Amtrak food and beverage service for the Downeaster. They independently contract the on-board food and beverage operation. There was considerable interest in the economic comparison between Maine’s use of a private food and beverage contractor verses the cost to other states for use of Amtrak-supplied food and beverage service.

As long as Amtrak depends on federal funding in order to operate their trains, Congress, which provides those funds, has every right to question how the money is being spent. When an independent investigator like the AIOG finds waste and fraud, Congress has an obligation to follow-up and review Amtrak’s response. By all accounts, Amtrak did just fine at this hearing, and the AIOG expressed general satisfaction with Amtrak’s response to last year’s report.
An excellent summary PRR. Hopefully this will lay some of the knee-jerk reactions to rest.
 
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