Discussion on why Food Service is Unprofitable

[user 652]

I don't think that it matters either way since the meals are complimentary, which mean that it's free. To me it mean that they're deliberately taking a loss on the meal revenue in order to lure customers to the sleepers. An incentive if you will.

Yet, they'll blame all losses on labor...

 

[Trogdor]

One must make a distinction between "price" (i.e. what the passenger pays to travel in a sleeper) and "cost" (i.e. the expense Amtrak incurs to transport that passenger, provide meals, etc.).

Amtrak, having to deal with the laws of economics, (theoretically) sets prices based on the level at which they can maximize their revenue. In this sense, price is not based on cost, or assuming a level of occupancy for anything. There are certain (admittedly rare) instances where the cost to upgrade to a sleeper is less than two passengers would pay for full meals in the dining car. There are other situations where the sleeper fare is the same for two passengers, even though one passenger is traveling farther, and his/her trip will cover an additional scheduled meal period.

Is Amtrak "taking a loss" by offering complimentary meals for sleeper passengers? The answer is yes *only* if their total financial results would be better if they stopped offering such an incentive. This means that the lost revenue from lower sales (people that wouldn't book the sleepers at those prices if food wasn't included; combined with the likelihood that prices would have to be lowered by some amount due to the economic effect of lower demand) would have to be less than the amount saved by not giving out free food (either through less food consumed, or through sleeper passengers paying in the dining car for their meals).

While I don't know the formula on how this amount is determined, it has been confirmed (and it would only make sense, from an accounting standpoint) that some money taken in as sleeper revenue is transferred to the dining car operation to cover the "free" meals. Some would argue that this means the meals aren't really free. I would argue that it doesn't make a rat's rear end of a difference what word you use, the end result is the same.

So, then the ultimate question is, is Amtrak better off providing food to sleeper passengers at no extra cost to those passengers? There is no way to be sure, based on current data.

 

[user 652]

Base on experience, Amtrak incur unnecessary (food) costs based on the contracts that they sign. For instance, the Sara Lee coffeemakers which were supposed to be installed in every Viewliner and single-level diner, has yet to be completed-during the first contract before it was renewed. For each one of the coffeemakers that they did install , the unit takes 1 decaf and 1 regular concentrated coffee pak (@ $45-$65 each) to operate it. That's 2 coffee paks for each car that has the coffeemaker each day from each endpoint. Here's the kicker... The (Douwe Egberts’ Coffee) paks yield approximately 276 cups of coffee per pak.

They're lucky if passengers in the car uses 40 cups on a given trip. And the pak can only be used one time because it has to be refrigerated until it's used. Once it's used, it can not be refrigerated for use a second time. SO, it get thrown out! And the story on the machines is another financial nightmare. But to hear them tell it, it's labor that's killing them financially.

 

[MrFSS]

Sounds like the $500 screw drivers the government buys!!!

 

[user 652]

If you only knew...

he sad part about it is that, there is not one person on the labor side signing these bogus contracts, or making these bone head decisions, yet the perception is that labor is what's causing all of these losses!

Another example: the crew hotel in Miami was costing Amtrak $40 a night to house the inbound crews from JAX. Because the hotel, at contract renewal time, wanted $3 more per night, Corporate Lodging opted to move the crews to another hotel for.......... $70 a night! Real geniuses, right?

But it's labor's fault...

 

[AlanB]

They're lucky if passengers in the car uses 40 cups on a given trip. And the pak can only be used one time because it has to be refrigerated until it's used. Once it's used, it can not be refrigerated for use a second time. SO, it get thrown out! And the story on the machines is another financial nightmare. But to hear them tell it, it's labor that's killing them financially.

Even worse is the fact that this coffee sucks by comparison to that made in the original coffee pots installed on the Viewliners, it's far more oily than the other. I suspect that these newer coffee makers might be a tad safer than the older metal ones that could splash hot coffee all over.

I even met an attendant one time that carried his own cinnamon and would sprinkle a bit on the filter pack before brewing. He made some really great coffee that way and I for one truly appreciated his going the extra mile for us pax. He got a nice tip from me.

But nonetheless give me the older ones, please!

I've actually walked to a different car to get my coffee when my car has the new fangled junk. One time I even had the attendant of the other car wondering why I had walked back, so I told him. And he agreed with me that he likes the old style pots.

 

[AlanB]

If you only knew...
he sad part about it is that, there is not one person on the labor side signing these bogus contracts, or making these bone head decisions, yet the perception is that labor is what's causing all of these losses!  

Another example: the crew hotel in Miami was costing Amtrak $40 a night to house the inbound crews from JAX. Because the hotel, at contract renewal time, wanted $3 more per night, Corporate Lodging opted to move the crews to another hotel for.......... $70 a night! Real geniuses, right?

But it's labor's fault...

That's sadly and simply because the labor numbers show up on one line on the financials, making the number seem horrific. Now don't misunderstand me, labor is a big cost and it is a factor. But Amtrak can never hope to break even by putting the entire blame on labor.

It will require cooperation from labor, while continuing to trim the management fat, and thru proper contract management for supplies, goods, and hotel rooms. No one group can fix the problem on its own, it will require Amtrak to address all three areas.

It seemed to me that David Gunn was at least dealing with two of those areas, labor and management, prior to his firing, but he had yet to deal with the contracts area. Don't know if he would have, although it did appear that he broke the contract for first class food on Acela last summer, but now we'll never know if he would have dealt with other contracts.

One thing however that I want to make perfectly clear, none of the above will ever make Amtrak profitable! That is an impossible goal. If the airlines can't make a profit by moving millions more people than Amtrak does every year, then there is no way that Amtrak will ever do so. A profitable Amtrak is one of the biggest myth or lies around.

The best we can ever hope for would be an Amtrak that manages to cover its operating expenses. It will always depend on Congress and the White House for capital improvements.

 

[Guest_Amtrak OBS Employee]

It will always depend on Congress and the White House for capital improvements.

Well said! Now if someone will just beat that into their (especially the White House) heads so they know that!!!! :blink: OBS...

 

[user 652]

Very well said, AlanB. The best-that they can thrive to achieve is to account for, and use wisely, every dollar spent. However, accountability and taking responsibility are the 2 most fleeting terms in the company's management vocabulary. And recycling uneducated managers won't make it any better.

Did you all get a chance to read the GAO report released back in October? Download it. Very telling...

 

[haolerider]

No one group can account for all the Amtrak ills........neither labor or management; however the more I observe the company, the more I am convinced that there are very few senior management employees who really ride the trains and see exactly what is happening. If they do ride, it is announced well in advance and everyone is on their best behavior, stations are cleaned up and all staff is alerted. Of course, many of them are on the NEC and never get out to the real world of long distance trains.

On the other hand, I have recently had clients on the Crescent and listened to them complain aout the dining car staff's poor level of service. I have always lauded the Crescent on-board staff, however constant public compaining about how much work they are expected to do - little attention to detail with the passengers orders and inconsistent service have become more of the norm than the exception. These are pasengers paying a fair amount of money to ride in First Class and they are being treated as though they were "in the way".

There really needs to be a "meeting of the minds" to get a coordinated effort underway to improve the level of service and the financial results.

 

[Trogdor]

Did you all get a chance to read the GAO report released back in October? Download it. Very telling...

I read the report, and thought it was poorly put together (to the point of almost being dishonest), and that the hype that certain folks (Mineta, Laney, et al) made about it was quite exaggerated.

The report did say that Amtrak had a ways to go in cleaning up the mess, but (despite what Mineta would have folks believe) the report also admitted that Amtrak was making significant progress in many areas, especially in accounting.

On the other hand, the report used data going way back to the middle of the Warrington era (if not earlier), and certain anti-Amtrak folk used that as "evidence" that David Gunn was doing a bad job. In fact, in a few cases, the report smeared Amtrak for problems that occurred during the Warrington era, only to note some time later that many of these problems had been fixed under David Gunn (though names usually were not used).

 

[user 652]

Well, take from it what you want. However, having a front row seat, we see and live this drama up close and personal...daily.

 

[Sam Damon]

Stuff like the Sara Lee coffee pot thing only give ammunition to Amtrak's critics.

The thing with the Sara Lee thing is, they are a big enough company to embarass in the MSM. Ripping off the government in the form of selling Amtrak stuff they shouldn't have bought in the first place hardly makes for the type of headlines CEOs want to see. This is the type of story that keeps editors happy with their reporters, so I fully expect someone to leak it.

(yes, I know Amtrak isn't the US government, but they do have a federal subsidy.)

I think we've only seen the tip of the iceberg as far as Amtrak contract flakiness.

Amgrunt, I have nothing but respect for those Amtrak OBS employees who offer quality service in spite of the conditions dictated by management goofiness. Since we're talking about coffee, let's remember that cream will rise to the top.

 

[trainboy325]

Assuming Amtrak is using cream! <_<

 

[AmtrakFan]

Apperntly there was something about a Superliner Diner/Lite in the January Amtrak Ink. It was interasting Read. The Design looked kind of neat with the counters.

 

[veririaa]

Amtrak charges sleeping car passengers for their meals XD If they didn't, there would be no reason to have a dining car, since it wouldn't be guaranteed that the sleeping car passengers would eat in there.

Also, I wouldn't work on the trains if I didn't make the money I make. It's no where near the $20 (misquoted) in the OP, but damn I wouldn't work for $6 an hour on the train and be away for 6 days! *laughs*