Amtrak Concession Losses Staggering

bridpath wrote:"For example, on my latest trip on the Crescent, plenty of people with me in the sleeping cars were happy dining in our rooms. Did we need a dining car? No, and since the train was sold out, if the dining car were converted into a coach or sleeping car, the train's revenues would increase significantly."

Where, then, would the food be cooked which you happily enjoyed in your room? I'd argue that the dining car served a dual purpose around the kitchen included in it: it served both the patrons in the dining car AND those of you who didn't need to leave the comfort of "home," so to speak. Seems kind of efficient to me.

Do it airline-style- have an on-board kitchen and have room service. Maybe keep a smaller dining room, but use at least some of the space for bedrooms or coach seats.

Also on my Crescent trip, I recall seeing dining car staff preparing salads in the dining room as the train was boarding. Why do this on board? Why not have everything that can be done offsite, done offsite and just loaded onto the train?

Airlines went through a process of re-thinking all parts of their planes after 9/11 and the years of high fuel prices in the 2000s to maximize revenue space and get rid of every unnecessary item on board and otherwise cut costs significantly. They've also totally re-thought their business models, such as by selling everything possible-fees for "premium" seats, priority boarding, etc. Amtrak needs to do this as well. It could surely eliminate some non-critical things from its train cars, such as cafe car tables that sit empty during much of a trip, and turn them into revenue-generating space. And Amtrak could surely sell things that are either free or unavailable now, such as perhaps $5 charges for priority boarding, selling food coupons at Quick-Trak kiosks and online, putting mini-vending machines in coach cars and having rolling carts for sales of snacks, etc. Amtrak should also be given the freedom to slash costs, such as by canning all of the unions that derailed the Empire Service food contracts with Subway.

Why does every travel industry innovation resulting in lower costs and higher revenues for the travel provider (e-ticketing, loyalty programs, etc.) NEVER start with Amtrak--always with private-sector firms such as airlines? Maybe if Amtrak would be more innovative in how it does business, it wouldn't have John Mica breathing down its back.

Well, at least the fiasco is good for a laugh:

Watch this youtube

SouthernRailway wrote:

bridpath wrote:"For example, on my latest trip on the Crescent, plenty of people with me in the sleeping cars were happy dining in our rooms. Did we need a dining car? No, and since the train was sold out, if the dining car were converted into a coach or sleeping car, the train's revenues would increase significantly."

Where, then, would the food be cooked which you happily enjoyed in your room? I'd argue that the dining car served a dual purpose around the kitchen included in it: it served both the patrons in the dining car AND those of you who didn't need to leave the comfort of "home," so to speak. Seems kind of efficient to me.

Do it airline-style- have an on-board kitchen and have room service. Maybe keep a smaller dining room, but use at least some of the space for bedrooms or coach seats.

Also on my Crescent trip, I recall seeing dining car staff preparing salads in the dining room as the train was boarding. Why do this on board? Why not have everything that can be done offsite, done offsite and just loaded onto the train?

Airlines went through a process of re-thinking all parts of their planes after 9/11 and the years of high fuel prices in the 2000s to maximize revenue space and get rid of every unnecessary item on board and otherwise cut costs significantly. They've also totally re-thought their business models, such as by selling everything possible-fees for "premium" seats, priority boarding, etc. Amtrak needs to do this as well. It could surely eliminate some non-critical things from its train cars, such as cafe car tables that sit empty during much of a trip, and turn them into revenue-generating space. And Amtrak could surely sell things that are either free or unavailable now, such as perhaps $5 charges for priority boarding, selling food coupons at Quick-Trak kiosks and online, putting mini-vending machines in coach cars and having rolling carts for sales of snacks, etc. Amtrak should also be given the freedom to slash costs, such as by canning all of the unions that derailed the Empire Service food contracts with Subway.

Why does every travel industry innovation resulting in lower costs and higher revenues for the travel provider (e-ticketing, loyalty programs, etc.) NEVER start with Amtrak--always with private-sector firms such as airlines? Maybe if Amtrak would be more innovative in how it does business, it wouldn't have John Mica breathing down its back.

Actually I believe Amtrak was the fore-runner with their Quik-Trak machines.

That said, look at how successful the airlines have been with all their "up-charges" "not very". Customer discontent is high. I don't think following the airlines is the way to go.

When people talk about the reason they take Amtrak is partly because of the comforts, I don't think removing those is really a good business move.

I won't even touch caning unions. How about we start with canning upper management?

Well, if/when the Federal government shifts to being even more anti-Amtrak, which is possible given Amtrak's poor public support (see plenty of polls showing high support for eliminating subsidies), Amtrak is doomed. Its current business model needs to be redone to ensure its survival, which is what we all want, right?

For revenues, while airline fees aren't popular, they have helped turn airlines' billions of dollars of losses per year in the 2000s into profits. And Amtrak doesn't need to nickle-and-dime people like airlines do; it just needs to consider "upselling" plenty of services that now aren't offered. For example, why not offer priority boarding for $5, to help avoid having to stand in long lines at big stations? Why not sell food coupons online or at Quick-Trak machines? Why not allow one to reserve a seat for say $5 (which European railroads have done for years)? I would pay all of those fees with no problem.

For costs, it will be difficult to take on unions, but there is no choice if Amtrak wants to cut costs and avoid the ire of people such as Mica. And why should my tax dollars go to pay an Amtrak employee (such as a cafe car attendant) when private firms would gladly provide similar services (such as the Subway options on the Empire Corridor) for less? That money could otherwise be used to provide more service, buy new cars, reduce Amtrak's subsidy, etc.

Problem with Priority Boarding is that many stations are in and out type setups. How do you do Priority Boarding at say Newark Penn Station with people coming on and off PATH or NJT?

jamesinclair wrote:Even if food cars lose money, theyre needed to make money.

IE: Theres no revenue to be had with a bathroom, just endless costs.

Remove the bathroom, and you lose your customers because no one will ride a train without bathroom facilities.


Same with food. The dining car may have been the difference between a patron taking amtrak vs greyhound.

Lose the dining car, you lose a customer.

The dining car may "cost" you $2 for the passenger, but if you make $5 off his ticket, then youre in business.


If Mica knew anything about business, he would understand this.

Actually, Im sure he does. Mica hates amtrak, and this is a slipper-slope witch-hunt.

Kill the dining car....lose passengers.
Then argue the baggage cars are losing money, cut them.....lose passengers.
Argue that amtrak rewards are socialism at its worst, cut it...lose passengers.

Now amtrak has so few customers the only rational choice is to cut all amtrak service!

Mission accomplished.

Yep. And you know what? Part of the Republican delegation in Congress does this *every few years*. And they always use numbers with a maximum amount of overhead assigned in order to come up with the "$3.70 can of Coke". Sheer dishonesty, and they do it every few years, and people *still fall for it*. It's sad that people are so ignorant that anyone takes this seriously.

Do you want to cut the cost of loss-leader food service? Make the trains faster and people won't demand as many meals per trip. That's really all there is to it. Make the trains faster.

SouthernRailway wrote:Well, if/when the Federal government shifts to being even more anti-Amtrak, which is possible given Amtrak's poor public support (see plenty of polls showing high support for eliminating subsidies), Amtrak is doomed. Its current business model needs to be redone to ensure its survival, which is what we all want, right?

For revenues, while airline fees aren't popular, they have helped turn airlines' billions of dollars of losses per year in the 2000s into profits. And Amtrak doesn't need to nickle-and-dime people like airlines do; it just needs to consider "upselling" plenty of services that now aren't offered. For example, why not offer priority boarding for $5, to help avoid having to stand in long lines at big stations? Why not sell food coupons online or at Quick-Trak machines? Why not allow one to reserve a seat for say $5 (which European railroads have done for years)? I would pay all of those fees with no problem.

For costs, it will be difficult to take on unions, but there is no choice if Amtrak wants to cut costs and avoid the ire of people such as Mica. And why should my tax dollars go to pay an Amtrak employee (such as a cafe car attendant) when private firms would gladly provide similar services (such as the Subway options on the Empire Corridor) for less? That money could otherwise be used to provide more service, buy new cars, reduce Amtrak's subsidy, etc.

There will no avoiding the ire of people like Mica. They are not acting in good faith. No amount of "reform" will ever make them happy--only getting rid of Amtrak in its entirety will.

Also, I'd be careful about claims of low public support. Sure, if you phrase a poll question in terms of "subsidy" there will be lots of opposition. On the other hand, polls that simply ask whether folks support intercity passenger rail find plenty of support.

As for "contracting out", there's pretty much zero evidence that it ever saves the government any money. Yes, private contractors will pay lower wages and benefits, but that doesn't result in savings to the taxpayer because that money represents the contractor's profit margin.

Finally, as to the airlines, there remains no airline other than SWA which has shown the ability to consistently earn a profit (and even SWA's is pretty small). As Warren Buffet has often said, from a business perspective, it would have been better if someone had shot Wilbur and Orville down.

Station Aficionado wrote: There will no avoiding the ire of people like Mica. They are not acting in good faith. No amount of "reform" will ever make them happy--only getting rid of Amtrak in its entirety will.

Also, I'd be careful about claims of low public support. Sure, if you phrase a poll question in terms of "subsidy" there will be lots of opposition. On the other hand, polls that simply ask whether folks support intercity passenger rail find plenty of support.

As for "contracting out", there's pretty much zero evidence that it ever saves the government any money. Yes, private contractors will pay lower wages and benefits, but that doesn't result in savings to the taxpayer because that money represents the contractor's profit margin.

Finally, as to the airlines, there remains no airline other than SWA which has shown the ability to consistently earn a profit (and even SWA's is pretty small). As Warren Buffet has often said, from a business perspective, it would have been better if someone had shot Wilbur and Orville down.

there needs to be some motivation for amtrak to run a reasonably efficient organization, there's no need for micromanagement from congress.

So, I have to correct myself. I can buy soda at 33 cents a can at the local supermarket. So I have to believe in bulk, Amtrak could do better.

And those who blame Union wages, I have to say I'm not buying it. At least not entirely. Let's take a typical ALB-NYP run of 2.5 hours. So, conceivably, a person can start in one city and flip back in time for the night. Give them 40 hours a week, 2080 a year. Taking a WAG at "costs" (including salary, medical, etc) of $75K.

They're costing Amtrak $36.05/hour. Let's be generous and say we missed some costs and it's $40/hour. Ok, substantially higher than what an employee at Subway makes, but they probably have better medical and retirement.

So, out of 8 hours, they're "working" 1/2 of that. (i.e. cafe car is open about 2 hours each way).

So, to cover their costs, they have to sell at least $80 of profit on their food.

Let's take soda. At 33 cents a can cost, and $2.00 sale price, they're "making" $1.67 can. Not a bad markup.

So, they have to sell approximately 48 cans of soda an hour. And that assume they sell nothing else.

If food in general has a similar markup (and here I'm taking a WAG), let's guess that average sale is $6.00 (soda, some chips, or a soda, pizza, etc.)
So, typical sale has a margin of about $5.00 Now they simply need to make 9 an hour, or one every 6.66 minutes. Seems reasonable.

So, so far if you ignore everything else, it should be possible for a cafe attendant to "pay their own wages".

But, if that can is "costing" Amtrak $3.70, there's a $1.70 being unaccounted for.

So, where are those costs:

Well, there's the cost of maintenance on the cafe car itself (note that Empire Service trains that terminate in ALB STILL incur this cost, they simply don't have cafe service).
(one could argue that such cost should be charged against the train itself, not the particular service. I'll leave that debate to others)

There's the cost of running commissaries. My guess is this is where a decent chunk of the costs are incurred.

There's the cost of overhead.
There's the cost of management.
There's probably other costs I'm not thinking of.

Again several points:
1) I don't think one will ever see food service be PROFITABLE (though it might be nice).
2) I don't think it's as easy as blaming "Union staffing" at least on the car. Though that's a contributing factor, it's far from the only one. (and honestly, do we want a country where everyone is working for minimum wage?)
3) I do think that things could be and should be more efficient.
4) Yes, Mica has an ax to grind and while I may not believe his specific numbers (like those on the costs of individual items), the bigger picture is verifiable and I think he has a valid point.

In socialist USA train rides YOU.

(that was a joke).

Mr. Moore, I also do not buy the union wages as the sole determinant.
I also think that food service operations can be profitable on certain routes, not just the nec (at least on an operating basis). if any costs can be trimmed, it's management. Mr. Boardman cites improved ratio (59%) but I'd guess most of that is attributable to an increase in ridership (in fact, that's what the annual report says). if a train run is 2.5 hours, the cafe car should be open for almost all of it, not 2 hours. if your assumption is true that they only work 4 out of 8 hours, that's a big, big problem. can you imagine a restaurant operating that way? if that's the case, it's not that they need to get paid less, but work more.
the key, aside from better food that isn't always microwaved, is alcohol sales. what is a case of macro beer, $20? how much do they sell it for on the train? even if they sold micro brews they'd pay maybe $1.25 per bottle or can and sell it for $5. at $40/hr, they need to sell 11 beers an hour to turn a profit assuming a margin of 3.75.

Would someone show me where Amtrak is making money on the CORPORATE bottom line, please?

John_Perkowski wrote:Would someone show me where Amtrak is making money on the CORPORATE bottom line, please?

It probably makes a profit on certain parts of its operations- maybe charter trains, maybe the Auto-Train, maybe hauling private cars on the back of its trains.

Whether Amtrak is or isn't, it shouldn't be wasting a cent- and surely there are less loss-making ways of running food service operations. Hotels have the same problem, and they take a variety of approaches to their restaurants- often contracting them out to third-party operators or tenants.

John_Perkowski wrote:Well, at least the fiasco is good for a laugh:

Watch this youtube

I feel bad for the YouTube commenters who honestly think that is real news, not a parody.

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.