Discussion on why Food Service is Unprofitable

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AmtrakLoverAndHater

Train Attendant
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Aug 24, 2005
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We always hear that food service on Amtrak hemorrages dollars, but I have never read a thorough explanation as to why this is. I will try to break it down between the dining car and the lounge car. Please correct any erroneous information as I think we all deserve to know what the real deal is!

Lounge car: 1 attendant per train? Runs convenience shop I guess you could say?

The costs of the product (food & drink) should be fixed because of a contract with gate gourmet. I would assume GG is paid to bring the product to the gate, and then the lounge car attendant will load it. I assume the average lounge care attendant makes $20/hr? Figure another $10/hr for benefits/workers comp/taxes etc. So it seems to me that the lounge car needs to make at least $35 profit per hour it is open (adjusting for times the attendant is paid and is the car is not open.. this is assumption again on my part please correct me if my numbers are off). I have to assume Amtrak prices its food to give an average of at least $1 per transaction (though after seeing how much 7-11 pays for $.99 Fritos I believe it could be higher) this means an average of at least 35 transactions per hour the car is open.

As for Dining car, I can see how this loses money. You have to pay 4 waiters, a supervisor, and 2-3 cooks. I figure combined these folks make an average of $25/hr. That means the car has to make at least $200/profit per hour it is open. I know many of the customers here are sleeping car passengers, who have their meal included. If anyone can provide some speculation on how much of the sleeping car fare goes to the dining car (does it only come from what people actually buy?), if any. Also, I imagine the markup here is huge on the food served, as it seems to be of a rather low quality. I really don't know much about the dining cars so any information you guys can provide would add to the discussioin
 
Well for starters, you have pretty much answered your own questions. I am not gonna go on and by correcting you on your numbers or such, but just hear me out by examining the big picture. You have to take all this you have posted into account in addition to the cost cleaning and maintaining the car, we have the costs of operating the car itself over the road, ie fuel costs, rail costs to the freights, etc The food service cars can show slightly profitable revenue especially when these costs are not factored in. Over here on the "Silver Service" trains, I am told the dining car breaks even with three full sleepers (not counting the coach revenue) in the consist. But these cars have to be sold out full for the majority of the trip. I am not too sure of where exactly the lounge cars come into play here, but I have reason to believe it is around the mark of four full coaches for most of the trip. I'll let someone else such as "trainboy" take a shot at this to provide a little better info regarding this subject. But pretty much if you ask me, you have answered your own questions for the most part.

One thing we have to remember is the fact the railroad didn't really have too much of a part in the food service aspect in the old days. The railroad simply provided the conductors, engineers, and brakeman (and I believe many provided the coach porters). Pullman Co provided the porters for the sleeper services and many of the dining car services in the begining. Only later were they granted status as railroad employees. Some of those who were around then (such as AlanB or Bill Haithcoat) might be able to correct me or give better info regarding this, however, being I wasn't even thought of yet! B) OBS....
 
Well put. What those of us too young to remember 'the good old days' (meaning under 50 years of age) can't understand is that the Pullman Company operated as a stand alone entity and, as you mentioned, weren't railroad employees. So the actual railroad wasn't charged with all the ins and outs associated with employee payroll, etc. They were (I beleive) subcontracted to the railroads to operate the sleeper cars and dining cars. When the Pullman Co. went under, all those associated costs became the railroad's albatross.
 
Thank you OBS for your input.

From what I gathered, it's entirely possible the lounge car is able to pay for itself with revenues from sales on the trips.

Thank you also for pointing out that 3 full sleepers for the dining car to turn a profit. The last two times I went on the Coast Starlate, there were 2 sleepers and a transition/dorm for the crew. For the sake of this discussion I will assume the Starlate also needs 3 full sleepers to turn a profit. It seems to me by only having 2 sleepers on the Starlate it is doomed to foodservice unprofitability from the get-go. I should also mention that both times all of the sleepers were full, which makes me wonder if a 3rd full sleeper would not make sense?
 
As someone who's learned about food costing and foodservice back in college, I believe this statement is a bunch of crap. If you have people captive on a train and you can't make money, you're just plain doing something wrong. Everyone else, disney, hotels, have a cash cow with the food service.

I heard an attendant talking about why they lose money on the diners. He was saying that the sleeping car people get free meals. Well once in a while someone will get lucky and get a cheap upgrade, 50 dollars, 100dollars, etc. If they eat the steak every meal for 2 days, the price of their dinner will exceed the price of the upgrade and it'll all be at a lose to Amtrak but a gain to the passenger. This is good to the passengers eyes, but that $14 steak doesn't cost 14 dollars. Assuming a 36% food cost that steak should be costing Amtrak $5.04. This is assuming all variables are the same as a stationary restaurant. Amtrak doesn't have the luxary of controlling their staffing costs though because they can't really send people home and have them punch out right? They have to provide room and board I guess.

I believe they should change something around or be a little more creative to make some more money in this area. Yes transportation isn't a for-profit enterprise, but concessions typically should be. There has to be something marketable we can add on or fix. It's doubtful it would be that easy, as I still haven't figured out an answer to my own question. But maybe I haven't ridden the trains enough yet.
 
guest_jeffw said:
This is assuming all variables are the same as a stationary restaurant. Amtrak doesn't have the luxary of controlling their staffing costs though because they can't really send people home and have them punch out right? They have to provide room and board I guess.
Well well well! Looky here, it just may not be a bunch of "crap!"

The key word here is "assuming!"

The variables are NOT the same as a stationary restaurant. You have listed a couple so far. <_< OBS...
 
guest_jeffw said:
I believe they should change something around or be a little more creative to make some more money in this area. Yes transportation isn't a for-profit enterprise, but concessions typically should be. There has to be something marketable we can add on or fix. It's doubtful it would be that easy, as I still haven't figured out an answer to my own question. But maybe I haven't ridden the trains enough yet.
As far as this statement is concerned, I agree. Amtrak is in the process of that right now if you want to take this "Subway" deal into account. We'll see how it goes over. I believe it will go over well with the general riding public. Not so great in regards to jobs for us OBS workers, but times are changing. OBS...
 
The statement that sleeper passengers get free meals is so "out of touch"!

The cost of a sleeper today is truly for passengers with "deep pockets" or has a real fear of airplanes! :p They can't eat enough food to justify the ticket price!

I do agree that something isn't right, when you have a captive audience! I recently went to a Dolphins game and paid $12 for a 16oz import beer in a plastic cup.

There is one added cost though! Anyt food items that have spoiled, food packages that were opened or out of date is thrown away! And, I've seen alot of good food go to waste!

MJ B)
 
Another factor that makes Amtrak different from Diz-knee, the local sports team, and whatnot, is what people bring with them. Frequently, stadiums (and possibly the Mouse, too, but I haven't been there in about a decade) will inspect what you carry in, and have certain rules about what you can and can't take into the facility. For Disney World/Land, do you really want to carry around a lunch box all day (especially considering everything else you're likely to wind up with over the course of the day)?

Coach passengers on Amtrak frequently bring their own food. The stadium may charge $50 for a beer and a burger, but professional sports stopped being affordable for most people long ago. I'm willing to bet that there are some stadiums where the average ticket price is more expensive than the average ticket price on an LD train, and after three hours, you're done and haven't even gone anywhere.

Amtrak's food-service prices are already particularly high, and as a result, folks stock up ahead of time and bring it with them. Sleeper passengers probably could afford the prices, but that's nugatory because their food is included in the price of the ticket.

When all is said and done, how many $3 pizzas and $1.75 Pepsis does it take to cover the LSA's compensation, the cost of the car, the cost of the food itself, and any other costs associated with the operation?

I don't know if the 35 transactions per hour figure is anything close to the right number for breakeven, but if it is, that's a very high number, considering: the total coach ridership may only be 200 or so to begin with, not everybody is going to be buying something from the cafe, those that do probably only do so once per meal period, and the cafe is closed for a good hour or so at the tail end of every meal period so the LSA can take his/her meal break.
 
rmadisonwi said:
Another factor that makes Amtrak different from Diz-knee, the local sports team, and whatnot, is what people bring with them. Frequently, stadiums (and possibly the Mouse, too, but I haven't been there in about a decade) will inspect what you carry in, and have certain rules about what you can and can't take into the facility. For Disney World/Land, do you really want to carry around a lunch box all day (especially considering everything else you're likely to wind up with over the course of the day)?
At risk of going slightly OT, consider a place like Kennywood Park, outside of Pittsburgh. It's a family-run amusement park that has provided years of summer fun for Pittsburgh-area families. They compete for the amusement dollar, and not only manage to survive, but thrive. Cedar Point still runs spots, but Busch Gardens in Williamsburg has quit running spots completely.

Part of what makes this amusement park so endearing to Pittsburghers is the chance to bring for families to bring their own picnic. Picnic areas abound. They do have limits on how big a cooler you can bring, but a family of four has no trouble with the park rules. I noticed something else this year at Kennywood during my obligatory family trip there with the kids -- they cut the price of their munchies, such as corn dogs and fries.

Not surprisingly, we ended up spending more on Kennywood's fast food than we had anticipated, but didn't mind it. The point is: Kennywood separated us from our money.

The economics of food service, particularly on railroad cafe cars and airlines, are not an easy subject to tackle. We are pretty much conditioned these days to bring our own munchies, in part because MBA-types have never been able to understand the connection between amenities and civilized transport for all.

(my gosh, what a rant. sorry, folks.)
 
I would have to say that I was 110% impressed with the quality and quantity of food we had on the Texas Eagle recently. The meals were served in shifts. Going down from Chicago, the sleepers were full. There were a pair of coaches that had around half full by central Illinois and St. Louis. By the time we got to Dallas, half of the people in both classes had departed. On the return trip, there were a few empty rooms and a whole empty coach. If numbers are important to food service, the return north hurt then.

I did see a few coach riders with snacks. They may have brought them on. I know I saw coach riders in the diner when we ate. It was my observation most coach riders had shorter trips than ours, making meals less important.

Going down, we were held up just in to Arkansas because of a tank explosion in Texarkana :eek: ! Up to that point, we were only about a half hour late. We sat in Hope, AR for two hours, and were held for atleast twenty freights between Texarkana and Dallas! We even overtook a few frights going in our direction. Now to where I'm going with this.....food. As the sun was setting an hour west of Dallas, the attendant announced we would be served supper, and given a number. Sleepers were served, but I don't think coaches were, as the train was terminated in Ft. Worth, where it arrived 6 hours late. I heard a server say something about another 106 meals, or something like that. We were among the last to eat our "bonus" meal, and had the New York strips. These were about all that were left, as most main courses and some sides were gone. No pie or cheesecake. Just ice cream and fruit. The fruit was the only choice by the last several couples. Nobody minded. It was an extra meal on Amtrak. Sadly, anyone after Ft. Worth was loaded on a pair of buses, and crew were to sleep on the train.

One thing I noticed that suprised me was how close the train was on food supply. An extra meal for most or all remaining passengers on a very late train was a good reason to run out of everything. I did think it was a nice gesture on their part. Especially given that the reason we were late was beyond their control. Come to think of it, the passengers going all of the way to San Antone would have been on for another meal, anyway. On the return, as previously mentioned, there were far fewer passengers. No extra meals. By lunch (the 1st lunch I had, but the 2nd the train had served), half of the choices or more were gone. What if the train had a bunch of last minute riders, like the group of 20 that rode from Chicago to St. Louis? They surely cut it close.

I really hope both sleepers and diners are kept. We plan to take the Texas Eagle to visit relatives again next year. We have to be pretty close to convincing some of them to take the train up to see us. That would be cool! :)

-Les In MI.
 
IF the food service department on Amtrak is unprofitable which I would have to guess it is, then the majority of the loss would probably be due to the sallaries of the union employees. How many restaurants pay servers $30-40,000 per year plus full benefits and retirement. Here in Michigan servers in a typical restaurant make about $2.52 per hour with no benefits. Fast food restaurant salaries are about $6-$7 per hour usualy with no benefits either. If a typical restaurant had to pay all there employees including dishwahers union wages and benefits while still charging the customer a reasonable price, then 99.9% of the restaurants would be bankrupt within 24 hours. I'm not a union member, but my wages and benefits reflect those of a typical UAW union employee so hence I do support unions and would not be in favor of busting the union employees on Amtrak food service cars or any other good union.

I can see where Amtrak can easily loose money from 2 experiences of my own. A friend of mine and myself took 2 trips recently in sleepers when we really didn't have any business purchasing a sleeper. One trip was from CHI to MSP. about a 8 hour trip. We got a deluxe room for $70 and split the cost. At dinner we had a $20 steak and $5 desert. So we almost got the sleeper for free when you consider the cost of the dinner. A similar situation from WAS to CUM, about a 2-3 hour trip. We purchased a std. sleeper for $62 and ate another $25 worth of food each.
 
amtrakmichigan said:
At dinner we had a $20 steak and $5 desert. So we almost got the sleeper for free when you consider the cost of the dinner. A similar situation from WAS to CUM, about a 2-3 hour trip. We purchased a std. sleeper for $62 and ate another $25 worth of food each.
Like I said before, just because they are charging you 20 bucks for the steak doesn't mean it's costing Amtrak 20 dollars. There's a markup somewhere. Unless it costs Amtrak 35 dollars to give you a 20 dollar steak, I don't know.

But my experience on the Empire Builder, wait list for every dinner and lunch on the trip.

The cascades were interesting(or is it "was interesting" since it's one train; singular?). It seemed as though the whole entire train gets up at once to go to the lounge car and pick up whatever. I can see them doing great business.

I like the subway plan too. I think that will work out. Though I hope they do more than just subway alone. If I traveled frequently I'd hate to have the same thing daily. Least microwave me a burger!

Taco Bell on the other hand..... :p
 
amtrakmichigan said:
IF the food service department on Amtrak is unprofitable which I would have to guess it is, then the majority of the loss would probably be due to the sallaries of the union employees. How many restaurants pay servers $30-40,000 per year plus full benefits and retirement. Here in Michigan servers in a typical restaurant make about $2.52 per hour with no benefits. Fast food restaurant salaries are about $6-$7 per hour usualy with no benefits either. If a typical restaurant had to pay all there employees including dishwahers union wages and benefits while still charging the customer a reasonable price, then 99.9% of the restaurants would be bankrupt within 24 hours. I'm not a union member, but my wages and benefits reflect those of a typical UAW union employee so hence I do support unions and would not be in favor of busting the union employees on Amtrak food service cars or any other good union.
While I understand the point you are trying to make here AmtrakMichagan, I have to say that I hate to see this comparison being used time and time again. Especially when it gets used by politicians.

Please don't misunderstand, this is not directed at you, but I've said it before on here, and I'll say it again, one cannot compare the pay scales of a typical resturant worker to a Amtrak worker in a dining car. This has nothing to do with unions and should not have anything to do with unions.

First, your average resturant workers doesn't need special training on how to evacuate a train and deal with train based emergencies.

Second, your average resturant worker goes home each night to sleep in his/her own bed. The average Amtrak worker spends probably 1/3 of the year sleeping in some hotel's bed or an Amtrak bed.

Three, your average resturant worker doesn't work three meals a day. Most work only one, maybe two meals per day.

Four, most resturant workers don't have a floor that is moving and bouncing under their feet while they are trying to carry trays full of hot drinks and food.

Five, most resturant workers have bus boys to help clearing and re-setting the tables.

Six, most resturant workers don't routinely get 5 tables of people that all arrive at the same time. Yes it does happen occasionally, but normally you have tables in different stages of the meal. On Amtrak, especially for lunch and dinner, it seems that everyone arrives pretty much within 5 to 10 minutes of each other. Only breakfast seems to be a bit more staggard.

I'm sure that I've missed a few more reasons, but these alone prove that there is no way to make a comparison between an Amtrak dining car worker and a normal resturant worker.
 
amtrakmichigan said:
I'm not a union member, but my wages and benefits reflect those of a typical UAW union employee so hence I do support unions and would not be in favor of busting the union employees on Amtrak food service cars or any other good union.
The point I was trying to make and maybe I wasn't too clear on is this:

In order for Amtrak to be profitable in the food service business at the prices they currently charge, they would have to resort to paying close to minimum wage to the food service employees in order to make a decent profit. Why do you think Mcdonald's does not pay $40,000 a year plus benefits to the 18 year old at the counter? Amtrak would have to resort to this type of salary or charge $3.00 for a can of pepsi, $10.00 for a ham sandwich and $40.00 for a t-bone.

Again I am all for the union, probably more then most people on this forum, since I see how union jobs benefit the local economy where I live in the greater Detroit area with automobile Mfg. I would never suggest that Amtrak employees should not be unionized or don't deserve union benefits. But the fact is in order to be profitable one of two things needs to happen. 1) cut wages and benefits or 2) increase prices to the point that nobody would purchase anything on the train. It seems to be a no win situation.
 
Although I don't know anything about the catering/food trade, I do run my own business, so I know a little about profits and costs. (my shop website!)

It is pointless to try and seperate the costs of the restaurant car out from the costs of the whole train, as without the restaurant car there would be far less people willing to travel long distances by train. There are no free meals for Sleeper Car passengers, but the cost of the meals is included in the overall charge for the sleeper. Remember that the cost of a ride from Chicago to Los Angeles in a roomette sleeper (2 nights) will be at least 275 dollars more than the coach fare. The comparable cost of a reasonable hotel per night might be $100, so the Sleeper passengers could be seen to be paying $75 towards their "free" meals!

(It is rather like an airline operating from LA to Australia, and moaning about the cost of providing passengers with food and drink...there would be few passengers willing to book long haul flights without meals, and on long distance trains asking each passenger to bring 2/3 days supply of food as a carry on item, all cold food, no hot drinks, etc, etc, is a silly idea! The diner cars are part of the train, and should not expect to stand alone when cost cuts are sought.

Ed B)
 
Sorry to say, but this is really bizarre situation impossible outside of U.S. No comment. But than we should never complain in the future "I ate on Italian/French/whatnot train more, it was better and cheaper". As long as this situation does exist, people like Mr. Minionetta or son of the Bush will always have an argument about prifitability of food or sleeper service and LD trains in general. To be honest, I rather see more LD trains running but with dining cars served by Denny's employees and sleepers by Mariott employees than no LD trains, no dining cars and no sleepers. And Bush's minions having one less issue to argue about. :huh:
 
would work for $6.00hr to 10.00hr and work on train where u gone for 3-4 days ? How about paying for medical benfits (yes we pay for health benfits) ?
 
The reality of long distance trains, if they survive the current Amtrak Board agenda, will be something like Gyuri said. Although I personally don't want to see my job disappear, I think the best thing for passengers overall would be some sort of return of a "Pullman Company" style first class operation. David Gunn's strategic plan had such an agenda. Although I support the opinion of union wages and benefits for railroad employees because the work environment, I do point to operators like Alaska Railroad and American Orient Express that have superior passenger customer service who have a "use them and loose them" work system. These operators use a system of of hiring college-aged workers that bust their butts for a few seasons and move on. Although the vast majority of Amtrak employees aren't a problem, the problems regarding systemwide surliness and burnout would be eliminated and I believe overall quality of Amtrak First Class emenities would improve with the substantial lower cost of labor, allowing for the return of traditional railroad positions like first class lounge bartenders and attendants, passenger relations officers and more waiters in the diner that can provide "real first class" diner service with proper tableware and service. Under the current system, OBS managers are focused primarily on how to save rather than how to improve customer service, especially on the staff levels necessary to provide superior service. Over the years, the quality of passenger services, especially first class products, have been cut almost in coralation with the rise of labor costs following ratifications of periodic union contracts.

With Gunn out of the picture, if the next Amtrak CEO is a transit operator, like Warrington and Downs of the past (we know what happened when they were in power), we'll see any remaining long distance trains become Palmetto-style trains if we're lucky. Although the labor cost of the sleeper is primarily on things like sheets, emenities, etc. rather than labor, the unprofitability of food service is specifically a labor issue than a product cost issue.
 
In reading the comments here (and I could write a book about the GG, Sara Lee, and other poorly negotiated giveaway tons of money to the vendors contracts), there was one food service that actually made money on the Silver Service trains. And that's the old buffet service. On each train there was a dining car and a buffet car together in the consist. You could choose the components of your meal from the hot line (steaks were cooked to order), pay for it at the end of the counter, and a waiter would take it and you to your table. The buffet service was a fast turnover service enabling the diner to quickly serve more people in the same time that they serve less people now (the combined trains carried upwards to almost 600 passengers at peak) .

On the losing money issue, I've not seen once here where there has been any mention of the increase in management personnel despite the steep decreases in agreement personnel and decreased ridership over the years. Where we had right about 7 or 8 management people running the equivalent of 4 trains (2 out of Tampa and 2 out of Miami) back in the day, we now have 15 (maybe more stashed back somewhere) running a division with half again less employees. Go figure! And the saddest part of it all is that there is one who doesn't even possess a high school diploma, yet has a middle management position. And the rest, save for a couple, have no college education to speak of. And yet, people wonder why this company continues to spiral out of control with its decisions and spending.

This isn't a b**ch. It's just the way it is.
 
That my friend is why I'm doing exactly what I'm doing. I'm hoping with Double Majors in Business Administration and Hospitality Administration I'll be on the fast track to management. I'm at one of the top business schools in the country, and should have an equally impressive resume' when I finish up in 09. We'll see what happens.
 
battalion51 said:
That my friend is why I'm doing exactly what I'm doing. I'm hoping with Double Majors in Business Administration and Hospitality Administration I'll be on the fast track to management. I'm at one of the top business schools in the country, and should have an equally impressive resume' when I finish up in 09. We'll see what happens.
LOL! God bless you, and I wish nothing but the best for you but: 1) I seriously doubt that there'll be an Amtrak in '09 and, 2) this company doesn't hire by whatever alphabet you have behind you name or what you know.

However, we can always hope that there will be a passenger service in '09, whether it's Amtrak or some other named rolling stock, and that you will realize your dream. ;)
 
Regarding the cost of food served to sleeper car passengers: it seems that the cost of a roomette, or other accomodation, is per ROOM, not per person. So they either average the cost of food over the average number of persons per room, or they lose money if a room is occupied by more than one person.
 
Well the costs are set up assuming maximum occupancy in the room. For a Roomette that's 2 people, Deluxe Room 3 people, Family Room 4 people.
 
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