Running Out of Café Food?

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Stocking more inventory under the current system may actually make things worse in some cases. When you operate a system that requires inventory reconciliation at both ends of a trip, carrying more inventory either causes the cafe to open later, and close earlier, or pay employees for longer work schedules. You need a major overhaul of how product is controlled and handled to make a real difference.
 
So - a bit of a diversion, but I started this thread, so I'm allowed. lol....

I sometimes wonder how many people are actually turned away by the super long lines and if a part timer or 2nd crew member could pay for itself in efficiency and moving more stock (stockpiled in the all-new imagined baggage car compartment)?
 
One of the most interesting private cars on the rails is the Support car. It's an ex UP I believe baggage car. It has four or five walk in coolers and freezers. Also has a fairly decent sized genset inside as well.
 
Here's another suggestion....when passenger's make their sleeping car reservations on long-haul trains....offer a chance to select included menu choices in advance. Even if just a portion of passenger's utilized that option, it would make guessing the rest of the stocking easier. In the same token, the opportunity to prepay and select menu choices for coach passenger's is also a possibility, to further improve the results...

It would really be just an expansion of what is already possible, by those arranging special dietary meals in advance...
 
In December I traveled on a sold out Wolverine from Royal Oak to Kalamazoo. Once we left Ann Arbor I decided to get some lunch. I got the last pizza and there was only 1 other sandwich/burger option. I wasn't the last person in that line either. It was so long it went into the next car. I was kind of surprised most things were gone at that point and we weren't quite halfway through the total trip. That's not the first time it has happened on that route.
 
I believe the Wolverines are trains running out of Chicago Commissary. So it would be run two for the consist. A heavy pax load on east or west bound can do major damage to inventory. Also unexpected surprises have happened. My beer story on the charter we thought they would only consume a normal amount of drinks. We were surprised at how much they could hold down. Which is why we ran out forty minutes into the trip.
 
The problem of inventory stock-out vs. carrying (or spoilage) cost is a classic area of study in Industrial Engineering. I can just about guarantee that stocking to avoid spoilage is not the profit-maximizing point as when you do so, you leave a huge amount of demand unmet. Spoilage or carrying cost is a cost of which must be borne to reach the profit-maximizng level of business.

Worse yet, in a closed environment such as a train or airplane where the customer cannot go to an alternate source (in normal life, if McDonald's has run out of hamburgers, you can go across the street to Burger King), when demand is unmet, customers start to learn that they cannot rely on there being product available, they start making other arrangements in advance and demand goes down. This can become a never-ending cycle where unmet demand reduces future demand which reduces supply which causes a new round of unmet demand, reduced demand, reduced supply, repeat until you're out of business. When airlines went to food for purchase on planes, it was not unusual for them to have run out of fresh items half-way through the first pass through the cabin so the rear had nothing left. I now eat before boarding and come armed with snacks and no longer buy on the plane since I can't count on them actually having anything I want.

Where I worked at one time, for a while I was getting breakfast in the cafeteria at work. But then I started to notice more and more they were out of what I wanted. Began to realize they were ordering to reduce spoilage even if it meant unmet demand late in the morning (when I came in). And while not as extreme as being on a train, going to an alternate source once at work was not much of an option so eventually, I started eating at home and demand at the cafeteria was reduced. I'm sure if enough of it did that, they responded by ordering even less.
 
lstone19 said:
The problem of inventory stock-out vs. carrying (or spoilage) cost is a classic area of study in Industrial Engineering. I can just about guarantee that stocking to avoid spoilage is not the profit-maximizing point as when you do so, you leave a huge amount of demand unmet. Spoilage or carrying cost is a cost of which must be borne to reach the profit-maximizng level of business.

Worse yet, in a closed environment such as a train or airplane where the customer cannot go to an alternate source (in normal life, if McDonald's has run out of hamburgers, you can go across the street to Burger King), when demand is unmet, customers start to learn that they cannot rely on there being product available, they start making other arrangements in advance and demand goes down. This can become a never-ending cycle where unmet demand reduces future demand which reduces supply which causes a new round of unmet demand, reduced demand, reduced supply, repeat until you're out of business. When airlines went to food for purchase on planes, it was not unusual for them to have run out of fresh items half-way through the first pass through the cabin so the rear had nothing left. I now eat before boarding and come armed with snacks and no longer buy on the plane since I can't count on them actually having anything I want.

Where I worked at one time, for a while I was getting breakfast in the cafeteria at work. But then I started to notice more and more they were out of what I wanted. Began to realize they were ordering to reduce spoilage even if it meant unmet demand late in the morning (when I came in). And while not as extreme as being on a train, going to an alternate source once at work was not much of an option so eventually, I started eating at home and demand at the cafeteria was reduced. I'm sure if enough of it did that, they responded by ordering even less.
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Excellent points...

So what do the most successful food operator's do, to mitigate this situation? It must be a very involved culinary management topic in schools covering it.....
 
lstone19 said:
The problem of inventory stock-out vs. carrying (or spoilage) cost is a classic area of study in Industrial Engineering. I can just about guarantee that stocking to avoid spoilage is not the profit-maximizing point as when you do so, you leave a huge amount of demand unmet. Spoilage or carrying cost is a cost of which must be borne to reach the profit-maximizng level of business.

Worse yet, in a closed environment such as a train or airplane where the customer cannot go to an alternate source (in normal life, if McDonald's has run out of hamburgers, you can go across the street to Burger King), when demand is unmet, customers start to learn that they cannot rely on there being product available, they start making other arrangements in advance and demand goes down. This can become a never-ending cycle where unmet demand reduces future demand which reduces supply which causes a new round of unmet demand, reduced demand, reduced supply, repeat until you're out of business. When airlines went to food for purchase on planes, it was not unusual for them to have run out of fresh items half-way through the first pass through the cabin so the rear had nothing left. I now eat before boarding and come armed with snacks and no longer buy on the plane since I can't count on them actually having anything I want.

Where I worked at one time, for a while I was getting breakfast in the cafeteria at work. But then I started to notice more and more they were out of what I wanted. Began to realize they were ordering to reduce spoilage even if it meant unmet demand late in the morning (when I came in). And while not as extreme as being on a train, going to an alternate source once at work was not much of an option so eventually, I started eating at home and demand at the cafeteria was reduced. I'm sure if enough of it did that, they responded by ordering even less.
Click to expand...
And I would think with nearly 50 years of operation and experience, Amtrak provisioning staff should have near perfect data on how much of what product is sold on particular routes and where along those routes demand is high and low.
 
railiner said:
Excellent points...

So what do the most successful food operator's do, to mitigate this situation? It must be a very involved culinary management topic in schools covering it.....
Click to expand...
The first thing is you need to know your costs. Without getting too deep into cost accounting, costs are divided into fixed and variable costs. For purposes of this (an Amtrak cafe car), fixed costs are things like the cost of the space on the car, the equipment, and the attendant's wages. They will be the same whether you sell everything or nothing. Variable costs are the costs of the food. Having 10 of an item in inventory costs twice having just 5. Your incremental profit is the difference between the selling price and the variable cost. While overall profit is important in the long run, when looking at how much you make by selling one more, the difference between selling price and variable cost is what you need to look at.

If your variable cost is low relative to selling price, then running out of inventory can be a hue mistake because you've left a lot of potential profit on the table. For instance, if the selling price is $5 and the variable cost is only $1 (and I don't think that is unrealistic for food operations - it doesn't cost a restaurant all that much to remake an order when an order gets messed up - little enough that most restaurants would rather redo an order than upset a customer), then each additional one you sell nets you $4 additional profit. It also means that running out of inventory is a huge mistake for you bottom line.

Using my example of $1 variable cost and $5 selling price and if you assume unsold product spoils (not unrealistic for fresh food on a train and in any event, makes my example easier), you only need to sell one additional unit 20% of the time to break even on carrying that extra unit. You'll spend $5 stocking it five times and receive $5 if you just sell it once. Sell if more often than 20% and you're printing money.

The past mentions of Amtrak's onerous inventory control system suggests that Amtrak doesn't really understand the value of their inventory and has put so many controls on it, it's a barrier to selling more (employees would rather sell less than have to do more end-of-trip paperwork). Almost everything in business is balancing risks. How much spoilage do we risk to increase sales? Or for these inventory controls, how many inventory discrepancies can you accept while letting the business still run efficiently (is it really a good use of anyone's time to figure out why a hardware store is short a five cent screw?).

This past summer, I was pleasantly surprised on an SJ (Swedish) train buying dinner in the bistro when thanks to a fumbled handoff from the attendant to me, a can of beer spilled. It was a small spill and I didn't have a problem taking the can (it was partly my fault) but he insisted on giving me another. I suspect they understand the value of the product (I'm sure that can of beer did not cost the close to what I was paying for it) and make it easy for him to account for spoiled product.
 
Inventory control on Amtrak must be a very arduous operation....but then, I recall stories from Amtrak's early years of expensive items's like coffee maker's and such disappearing from food service cars...
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Just a thought, what if the cafe attendant made a commission on what was sold as part of the wages. This might have the attendant willing to do the paperwork in order to have the potential of selling more product. Also, nearing the end of a round trip, why not allow the attendant to reduce pricing to sell off items that can not b returned to at least recoup the cost of the non returnable inventory.
 
So, one solution is as was previously mentioned, a cold storage in the baggage car. Herein lies a bit of the problem, but it can still be mitigated. Frozen food has a much greater shelf life than thawed. Thawed food is more consistently prepared. Perhaps carry more frozen stock, thaw as demand begins to show. If unused, no harm.

Or, we can just forego the café attendant and replace him with vending machines ala Piedmont.

Spain, Japan, Russia, all have vending machines that put out warm mushy burgers, just like the café car does.
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Actually, we'd have to keep the attendant to sell beer & wine.
 
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