Amtrak Concession Losses Staggering

Actually Mr. Moore you did not add the LSA's sign up time that is two hours before the train departs. In that sign up time they have get the inventory for their train, stock their shelves and store the excess inventory. Then after every trip the LSA's have to settle out account for food sold which to be fair they sometimes do start their paperwork before the train is stopped. If their final stop has a comissary LSA's cannot leave their train until they are counted out. I'm only generalizing the LSA's duties because the end of trip auditing is a little more complicated and I haven't worked a train with a cafe car in a long time so my memory is not the best. But from what I understand for a typical 8 hour day for a LSA with sign up time and all the end of trip duties for each train, they end up working more than 8 hours.

BmSmall14 wrote:Actually Mr. Moore you did not add the LSA's sign up time that is two hours before the train departs. In that sign up time they have get the inventory for their train, stock their shelves and store the excess inventory. Then after every trip the LSA's have to settle out account for food sold which to be fair they sometimes do start their paperwork before the train is stopped. If their final stop has a comissary LSA's cannot leave their train until they are counted out. I'm only generalizing the LSA's duties because the end of trip auditing is a little more complicated and I haven't worked a train with a cafe car in a long time so my memory is not the best. But from what I understand for a typical 8 hour day for a LSA with sign up time and all the end of trip duties for each train, they end up working more than 8 hours.

Thank you Mr. BmSmall1 for your input. You are correct, I did not add that in, in part because I assumed much of that was accounted for in the other 3 hours of their time on a short turn like the Empire Service. In addition, it doesn't really make much difference since as I understand it LSAs are salaried positions and as such a 9 hour day doesn't necessary cost more than an 8 hour day.

But, in general, I do think it points out that one can't simply treat the cafe car like a traveling corner store where one simply turns off the lights and locks the door and goes home at night. A cafe car will always have certain costs their non-mobile companions don't have.

Gilbert B Norman wrote:Here is Mr. Boardman's testimony prepared for the Hearing:

http://www.amtrak.com/ccurl/136/822/Amt ... 2-2012.pdf

I have learned that Rep. Mica pulled some kind of stunt at the Hearing involving a Big Mac; further details I know not.

As always Mr. Norman, thank you for inputting facts into an area full of speculation.

If Amtrak truly is recovering 59% of their food costs in 2011 (up from 49% in 2006) that's a pretty decent number. And it sounds like they are making strides to further improve cost recovery. Personally, I'd like to see 75% or great cost recovery, and honestly, it sounds like it might be achievable. But even if they achieve 70% that's pretty good.

And for those who advocate eliminating it, note the 1st footnote:
1
See House Report No. 97-783 (August 19, 1982), pp. 58-59, which stated that, for purposes of satisfying the food service cost recovery requirement now codified at 49 USC 24305(c), up to 10% of ticket revenues could be attributed to food and beverage service because “substantial revenues would be lost if this service were eliminated.” Food and beverage costs not covered by food sales are equivalent to about 5% of Amtrak’s current ticket revenues.

Last night on Fox Van Susteren show, large segment with Mica on the Amtrak "shocking" food costs.
By and large absolutely NO breakdown at how cost/s arrived at, just that a 50c can of soda costs mega bucks in 'subsidies' over sale cost to consumer on trains.

Sure would be nice if someone could get 'on air' to actually break down this nonsense and see how the allocations are assigned.

As is, this is the ploy to get rid of Amtrak, first can the food service, then patronage drop offs will "do the rest"

On the other hand, what IS amtrak actually paying for a burger or can of soda, and what really are the true admin and other costs that SHOULD be allocated to the true 'as delivered to customer' costs?

What WOULD the potentials be for a McDonalds or other private service aboard Amtrak, and what true rolling stock and per mile
haulage costs should be charged to a vendor, or passed on to customer, for operation/s of a Cafe or dining car?

I can't really believe that either way the true total costs can be near as high as Mica states.

Here's Rep Mica feeding some Red Meat to the Fox News crowd:

http://www.youtube.com/watch?v=ErLSaeEQBAI

Such is with reference to Mr. Morris' immediate posting.

Where did the $40/hour figure come from?

"The pay system is based on a scale determined by the years of seniority one holds in the craft in which they have qualified. Under the contract, if you can hold a regular job, defined as an employee can work a regularly scheduled job that the employee made a job bid on without being displaced by another employee holding more seniority (commonly known as "bumping") sets the standard for the scale. Here are the numbers for an employee who are being paid 100% of their craft's pay ceiling (per hour):
Train Attendants (coach, sleeper, business, etc.) 18.86
Service Attendants (dining car waiters) 18.86
Lead Service Attendant (cafe/lounge/dinnette attendants) 19.50
LSA Diner (dining car stewards) 21.93
Food Specialist (second cook/dishwasher) 20.30
Chef (kitchen manager/held responsible for food stock) 20.66"

http://discuss.amtraktrains.com/index.p ... ts-salary/

All information I can find is consistent with these figures.

bridpath wrote:Where did the $40/hour figure come from?

"The pay system is based on a scale determined by the years of seniority one holds in the craft in which they have qualified. Under the contract, if you can hold a regular job, defined as an employee can work a regularly scheduled job that the employee made a job bid on without being displaced by another employee holding more seniority (commonly known as "bumping") sets the standard for the scale. Here are the numbers for an employee who are being paid 100% of their craft's pay ceiling (per hour):
Train Attendants (coach, sleeper, business, etc.) 18.86
Service Attendants (dining car waiters) 18.86
Lead Service Attendant (cafe/lounge/dinnette attendants) 19.50
LSA Diner (dining car stewards) 21.93
Food Specialist (second cook/dishwasher) 20.30
Chef (kitchen manager/held responsible for food stock) 20.66"

http://discuss.amtraktrains.com/index.p ... ts-salary/

All information I can find is consistent with these figures.

As I said, the $40/hour was a WAG (Wild-Assed-Guess). And based on your numbers, it doesn't sound far off. Keep in mind that salary is far from the "cost" of an employee. A typical rule of thumb (and it depends a lot on the industry and other factors) is that an employee cost can be as much as 2x their salary when you figure in additional costs such as employee 1/2 of FICA, health-benefits, insurance costs (not sure if Amtrak has to pay worker's comp or if they self insure) and other associated costs. Even if my WAG was high, it only shows that the cost of the LSA most likely is NOT the dominating costs in a cafe car.

bridpath wrote:Where did the $40/hour figure come from?

"The pay system is based on a scale determined by the years of seniority one holds in the craft in which they have qualified. Under the contract, if you can hold a regular job, defined as an employee can work a regularly scheduled job that the employee made a job bid on without being displaced by another employee holding more seniority (commonly known as "bumping") sets the standard for the scale. Here are the numbers for an employee who are being paid 100% of their craft's pay ceiling (per hour):
Train Attendants (coach, sleeper, business, etc.) 18.86
Service Attendants (dining car waiters) 18.86
Lead Service Attendant (cafe/lounge/dinnette attendants) 19.50
LSA Diner (dining car stewards) 21.93
Food Specialist (second cook/dishwasher) 20.30
Chef (kitchen manager/held responsible for food stock) 20.66"

http://discuss.amtraktrains.com/index.p ... ts-salary/

All information I can find is consistent with these figures.

I can see benefits doubling real cost. if true, it's $80 per revenue hour.

Greg Moore wrote: But, in general, I do think it points out that one can't simply treat the cafe car like a traveling corner store where one simply turns off the lights and locks the door and goes home at night. A cafe car will always have certain costs their non-mobile companions don't have.

here's where I think you're going off the rails. aside from the fact that it's a cafe car and not a corner store car, running a corner store isn't just turning the lights on. there's inventory and a till. when you're done you're shift at a cafe, you count out...you just don't get two hours to do so...perhaps the manager/owner will spend that much time reconciling everything at the end of the day for a number of employees. if it actually takes that long, then Amtrak management isn't doing it's job to streamline the process (which was the case). They recently installed a POS system on the Acela with the eye towards national implementation that should do just that. the paperworks that employees have had to do is archaic and goes a long way towards explaining why amtrak has had such a poor grasp of its expenses. if you can shorten the length of time it takes to back end work you can increase the amount of time that an employee is selling which is an increase in productivity (lowering revenue hours from $80/ hour to $58/hr)

lastly, I'd like to add that Amtrak credits it's recovery ratio to improved ridership mainly, and a price increase

Amtrak’s food and beverage operations provide passengers with various meal options while in route.
Revenues from sales of food and beverages increased by $11.9 million because of an increase in ridership
and a 3.0% - 4.0% increase in prices in fiscal year 2011, compared with fiscal year 2010.

http://www.amtrak.com/ccurl/677/158/201 ... -Final.pdf
busy trains sell more stuff.

Greg Moore wrote:

bridpath wrote:Where did the $40/hour figure come from?

"The pay system is based on a scale determined by the years of seniority one holds in the craft in which they have qualified. Under the contract, if you can hold a regular job, defined as an employee can work a regularly scheduled job that the employee made a job bid on without being displaced by another employee holding more seniority (commonly known as "bumping") sets the standard for the scale. Here are the numbers for an employee who are being paid 100% of their craft's pay ceiling (per hour):
Train Attendants (coach, sleeper, business, etc.) 18.86
Service Attendants (dining car waiters) 18.86
Lead Service Attendant (cafe/lounge/dinnette attendants) 19.50
LSA Diner (dining car stewards) 21.93
Food Specialist (second cook/dishwasher) 20.30
Chef (kitchen manager/held responsible for food stock) 20.66"

http://discuss.amtraktrains.com/index.p ... ts-salary/

All information I can find is consistent with these figures.

As I said, the $40/hour was a WAG (Wild-Assed-Guess). And based on your numbers, it doesn't sound far off. Keep in mind that salary is far from the "cost" of an employee. A typical rule of thumb (and it depends a lot on the industry and other factors) is that an employee cost can be as much as 2x their salary when you figure in additional costs such as employee 1/2 of FICA, health-benefits, insurance costs (not sure if Amtrak has to pay worker's comp or if they self insure) and other associated costs. Even if my WAG was high, it only shows that the cost of the LSA most likely is NOT the dominating costs in a cafe car.

Even if an employer self insures, there is a cost as claims will need to be paid, which may be less but likely not substantially less than the cost of premiums, so it is reasonable to keep that cost in your calculation.

The huge benefit to Amtrak for spinning off its basic food service operations is all of the BS inventory controls the service attendants have to perform in addition to having to pay these attendants wages and benefits that are head and shoulders above the normal market rate for food service. Right now Amtrak needs to monitor its employees to make sure they aren't either skimming revenue or selling their own product as well as manage the purchase and stocking of said food items. If this were to be franchised out not only would such theft no longer be Amtrak's problem, you might have a situation where it isn't a problem at all, such as the attendant being the franchise holder who pays Amtrak for the space and then keeps whatever they can make.

Amtrak's interest in all of this is to have a somewhat consistent service, at least per defined train service, like Regional, Keystone, etc. Amtrak hasically has two choices. They can "go big" as in they get a vendor to run the food service in all of a certain class of trains. Like a mall that Vendor would be penalized if the cafe were to be unable to perform its duties, but aside from that the vendor would get to enjoy all the risk and rewards after paying Amtrak a fixed rent. Amtrak could also try a something akin to the Taxi model where it sets a menu and prices and individuals rent their slot on a cafe and purchase from Amtrak or some other supplier their basket of menu items for that trip. The attendant would be a self employed entrepreneur and Amtrak would bare no risk of loss. Slots could be filled in a bidding process. If certain trains lack enough business then the bid could go negative and Amtrak would subsudize the food service in that case.

Something from the Gothamist; I apologize if it's been covered earlier: http://gothamist.com/2012/08/03/amtrak_ ... illion.php

As people who really love riding trains and who really want Amtrak to be far better than it is—oh, for tomorrow's super fast trains to be here today!—we really wish the railroad would/could get its financial act together. Because losing more than $800 million in ten years on food alone is just absurd.

And it gets worse. The money-losing railroad’s food and beverage service has never once broken even—despite being required to by Congress in 1981. Basically, Amtrak loses about $80 million a year selling food, according to the railroad's own inspector general and the Government Accountability Office. Since 2002, Amtrak’s food service has lost $834 million!

The biggest problem appears to be the food on the railroad's long-distance routes, but cash also gets lost to "poor management, lack of planning and enforcement of its food and beverage contract." It's also estimated that between $4 and $7 million in food is lost annually to theft by Amtrak employees.

It's also estimated that between $4 and $7 million in food is lost annually to theft by Amtrak employees.

I am of the mind that there are certain classes of job where it is actually advantageous to encourage high turnover. I have mentioned before that Amtrak food service workers are in a low skill, high compensation position. These jobs provide high up front value for the worker as after all they get high pay to perform an otherwise low value job, but over time these types of job can be come a trap as the worker will always have the incentive to pass up potential paths for advancement like changing positions or getting more education. This is because from a tactical point of view such moves may result in a drop in pay or increase in work, even though in the long run such moves would make them better off. A related issue is where such a job is also low satisfaction as in the nature of the work doesn't make one feel accomplished or the work environment is irritating or hostile. If you combine the two factors of not getting anything out of one's job and seeing others in your peer group pass you by in terms of career advancement it can set the stage for "alternative compensation strategies" and reduction of effort to minimum levels.

Paying market rates will foster less attachment to the job and if there is any loss of job satisfaction the employee will find it much easier to move on. Furthermore with higher turnover employees will be less able to learn how to game the system over time resulting in much less inventory shrinkage. While in many cases these risks are offset through the benefits of having long tenured employees (such as the dining car and passenger service staff), I don't see much benefit of having a 20 year veteran standing in a booth all day heating up AmHotdogs in a microwave. Of course the best way for Amtrak to have its cake and eat it too is to simply contract out the whole short haul Cafe food service business so that any theft or mismanagement of inventory is no longer Amtrak's problem.

Jersey_Mike wrote:

It's also estimated that between $4 and $7 million in food is lost annually to theft by Amtrak employees.

I am of the mind that there are certain classes of job where it is actually advantageous to encourage high turnover. I have mentioned before that Amtrak food service workers are in a low skill, high compensation position. These jobs provide high up front value for the worker as after all they get high pay to perform an otherwise low value job, but over time these types of job can be come a trap as the worker will always have the incentive to pass up potential paths for advancement like changing positions or getting more education. This is because from a tactical point of view such moves may result in a drop in pay or increase in work, even though in the long run such moves would make them better off. A related issue is where such a job is also low satisfaction as in the nature of the work doesn't make one feel accomplished or the work environment is irritating or hostile. If you combine the two factors of not getting anything out of one's job and seeing others in your peer group pass you by in terms of career advancement it can set the stage for "alternative compensation strategies" and reduction of effort to minimum levels.

Paying market rates will foster less attachment to the job and if there is any loss of job satisfaction the employee will find it much easier to move on. Furthermore with higher turnover employees will be less able to learn how to game the system over time resulting in much less inventory shrinkage. While in many cases these risks are offset through the benefits of having long tenured employees (such as the dining car and passenger service staff), I don't see much benefit of having a 20 year veteran standing in a booth all day heating up AmHotdogs in a microwave. Of course the best way for Amtrak to have its cake and eat it too is to simply contract out the whole short haul Cafe food service business so that any theft or mismanagement of inventory is no longer Amtrak's problem.

That and it allows Amtrak to devote its attention to running a railroad, not diverting some of that attention to running a fast food business for which third parties have much more expertise.

Ken W2KB wrote:
That and it allows Amtrak to devote its attention to running a railroad, not diverting some of that attention to running a fast food business for which third parties have much more expertise.

unless the food losses are simply a manifestation of an organizational deficiency

And it's back in the news again:

http://washingtonexaminer.com/amtrak-sn ... H1xvrRiZja

Drudgereport linked to this article, which means a huge number of hits. It seems based on this release of this report:

http://www.heritage.org/research/report ... mbers-2012