Silver Star Downgrade and Diner Discussion

For the Star, selling out "more" represents a year-over-year improvement in ridership (since past demand appears not to have sold out the sleepers while July saw more sell outs and a big YOY jump in sleeper riders) and likely neutral-ish revenue performance --and so economic success at retaining revenue via fare stimulation and much lower costs through diner suspension.

Yes, but how many were duped into getting offered lower prices on a longer route that offered horrible meal service in an Amfleet Café. Frankly, they should run another experiment - lower sleeping car prices (or whatever is offered now) and then "pay your own way" in a Viewliner Diner. NOT a Heritage Diner - a Viewliner Diner. What complaints is Amtrak dealing with on the Silver Star without a full service Diner?

Granted it, I was surprised when riding the Star. Northbound, dinner (as Tampa was said to be the largest station stop in Florida for this train) and lunch were the most popular, as opposed to breakfast and dinner on day 2. Southbound, it was dinner on day one and breakfast on day 2 as most people were departing during what would have been normal lunch hour.

BUT this was the train that I saw the MOST with passengers bringing their own food onboard to have that instead of going to the diner. So the truth of the matter - Amtrak is pricing coach passengers right out of the diner. For some reason I notice this more on the single level Eastern trains than the Superliner western long hauls..........

jp1822 wrote:
. So the truth of the matter - Amtrak is pricing coach passengers right out of the diner. For some reason I notice this more on the single level Eastern trains than the Superliner western long hauls..........

When Jp1822 is right, he's right. it is my opinion that the car has priced itself out of relevancy. Additionally, as I previously noted, Amtrak has downsized the consist to the point that it is barely needed. There aren't really enough people on the the train long enough to patronize it.

Of course, this could just be a cynical attempt by Amtrak to either:

A - get one of the Atlantic coast trains discontinued. They'd have to move the Palmetto to cover the "inland" via Columbia route so as to avoid abandoning that segment and obviating the need for the requisite notice. Of course, that would be very tough on the Palmetto for timekeeping.

B - use the experiment to illustrate to those in Congress (cough, Mica, cough: Mica "News" Release) who decry the food service loss, and not see it for what it is; a necessary loss to drive patronage on LD trains. Of course, those don't earn any money either. (Mica release quoted in full below)

And, before you say it, I'm not saying they should, or shouldn't, be expected to make money at this point.

Have we established what caused the diner loss? Was it an experiment? An equipment shortage? Would a cafe car loss be any more or less than a diner?

https://www.amtrakoig.gov/search/site/food%20service" onclick="window.open(this.href);return false;

http://www.amtrak.com/ccurl/196/210/Amt ... 13-115.pdf" onclick="window.open(this.href);return false;

FOR IMMEDIATE RELEASE
October 3, 2013
ATK-13-115
Contact: Media Relations
202 906.3860

AMTRAK COMMITS TO END FOOD AND BEVERAGE LOSSES
WASHINGTON –Amtrak is moving forward with a plan to eliminate its food and beverage losses over five years. It builds on successful initiatives implemented since FY 2006 that have increased the cost recovery rate from 49 percent to 65 percent.

“We have made steady and consistent progress, but it is time we commit ourselves to end food and beverage losses once and for all,” said President and CEO Joe Boardman. “Our plan will expand initiatives that have worked, add new elements and evolve as updated information and opportunities lead us to better solutions.”

Amtrak Inspector General Ted Alves agrees improvements have been achieved and testified before Congress that “over the last several years, Amtrak has taken action to reduce food and beverage losses and improve program management controls and these efforts have yielded benefits. We believe opportunities remain for further improvement.”

In inflation adjusted dollars, the Amtrak food and beverage loss is down $31 million, from $105 million in FY 2006 to a projected $74 million in FY 2013—or about a 30 percent move in the right direction.

Boardman explained that approximately 99 percent of the food and beverage loss is reported from the long-distance trains that Congress requires Amtrak to operate, specifically costs associated with the dining car service. Cafe car services across the system, on the other hand, essentially break even or make a positive contribution to the bottom line.

The centerpiece of the plan is an improved management structure that consolidates operations and accountability for food and beverage into a single department. This new organization also establishes a long-distance services general manager and route directors responsible for profit and loss of specific trains who will identify opportunities for further cost savings and efficiencies.

Some of those opportunities include: aligning dining car staffing with seasonal changes in customer demand; establishing metrics to assess service attendants’ onboard sales performance; reducing spoilage; closely tracking onboard stock levels; regularly refreshing menus; and exploring new pricing and revenue management options to align with customer needs and enhance cost recovery.

Further, Amtrak is using technology onboard trains aimed at improving customer service, automating financial and other reporting, and eliminating the error prone and time consuming method of manual data entry. Just this week, for example, Amtrak began a pilot on the Silver Meteor (New York-Miami) long-distance train to test a new touch-screen tablet-based solution that dining car service attendants use to take passenger orders and print customer receipts.

In 2014 Amtrak will roll out its Point of Sale (POS) system across its national network. Currently in operation on Acela Express and California trains, POS technology improves the customer experience by streamlining the check-out and receipt printing process in café and lounge cars, and allows onboard employees more time to focus on sales and customer service. It also provides real-time inventory status, better decision support and more flexibility to introduce targeted pricing and discounts, including value and combo meals.

Also in 2014 Amtrak plans to test “cashless” sales for food and beverage on certain routes. The elimination of cash reduces transaction time and significantly reduces accounting expenses and the risk of fraud or abuse. In addition, many venues that have pursued similar initiatives have seen increased sales. This model is very popular in the airline industry and has been seen as a favorable change by travelers.

“I am confident Amtrak will succeed in this effort just as we have in other areas and across a wide range of financial and operating performance metrics,” he said, noting records for ridership, ticket revenues, and on-time performance as well as significantly reducing corporate debt and the amount of federal operating support.

If Amtrak were to eliminate food and beverage services as some observers recommend, the railroad would actually lose more money because of the loss in associated ridership and ticket revenue, and thereby increase its dependence on federal support, he stated.

The emphases above are mine; I haven't seen any such "refresh" or "value and combo meals".

Here's the Mica release:

Report Confirms Huge Amtrak Food Losses Continue
Washington D.C.–“The continued losses on Amtrak’s food and beverage services spiked again this year, and this waste of taxpayer funds must be stopped,” said Former House Transportation and Infrastructure Committee Chairman John Mica (FL-07). “With privatization and long-needed reforms, hundreds of millions of taxpayer dollars would be saved especially at a time when the federal government is in a financial crisis.” Mica continued that the Inspector General confirms that by making incremental business changes, Amtrak food service could save more than $50 million.

The report released todayby the Amtrak Inspector General disclosed that Amtrak lost $72 million on operating its food service in 2012 and expects its losses to spike to more than $80 million in 2013. The report continued to state that Amtrak could save more than $10 million annually by making incremental changes to its business model and another $51.4 million to $60.5 million annually through privatization of its food service operations.

“The Inspector General’s report confirms Amtrak’s inability to eliminate its food and beverage losses despite legal requirements to do so dating back to 1982,” said Mica. “As this report also confirms, Amtrak food service operations cry out for reform so that taxpayers are not stuck with picking up the check for this multimillion dollar tab.”

Amtrak’s food service losses totaled nearly $1 billion over the past 12 years. Both the Amtrak Inspector General and the U.S. Government Accountability Office (GAO) have previously highlighted major waste, fraud and abuse in Amtrak’s food and beverage service.

Additionally, a federal law passed in 1981 mandated Amtrak break even on its food and beverage service by 1982. Despite this, Amtrak has failed to eliminate taxpayer subsidies on food service operations and has instead doubled down by bringing on celebrity chef to create gourmet meals. Every Amtrak long-distance route and its food service operations are heavily subsidized by taxpayers, with some losing more than $400 per passenger ticket.

“Amtrak has never broken even on food and beverage service, and I intend to investigate these outrageous expenditures within our Government Operations Subcommittee,” Mica added. “Amtrak must be held accountable to the taxpayer and Congress. I will continue to fight to improve the cost-effectiveness of Amtrak’s money losing routes and stop these extreme losses.”

Meals must cost a lot more when they have to pay for a seat, a plate, a table, table-setting, and human person who walks your order to the kitchen and walks your food back (and a place for that staff to live for a shift or two). If Amtrak could just sell the food part of food (without all the kitchen-and-furniture parts of dining) then costs and prices could be much closer to "coach" expectations. The layout and staffing of "the factory" has to change if you want its products to be affordable by Everyman. I'd rather focus my efforts on getting the cafe to step up its game than to break my head trying to take costs out of the diner.

Right now we're basically seeing that the diner alone costs 100% of Sleeper ticket revenues (FY 2014 saw the star sell ~$7.8m in total Sleeper class tickets all year versus a best guess of ~8.4m for a year of diner costs ($700k per month)) Too much hardware chasing too few additional dollars (negative dollars, actually, as configured in 2014)

No matter how fancy the airline's International First Class gets, you still have to eat your meal at/in your one seat/bed/suite.

Arlington wrote:I'd rather focus my efforts on getting the cafe to step up its game than to break my head trying to take costs out of the diner.

That's exactly what they've done on Acela and it works very well.

Headline: Star's August performance is consistent with the diner savings being about 10% of costs, with ridership up roughly +25% and revenue roughly unaffected (when you consider how the LDs, overall, are doing)

But before we look at the Star/Meteor, I begin with an all-LDs mystery (cross posted to the Amtrak Success Stories thread) of an overall huge (30%) reduction in reported LD operating costs: An effect so big that it has the potential to swamp any diner costs : For the last 3 months, the total YTD cost of ALL LD routes were:
Aug 960.5 (67.5 for the month)
Jul 893.0 (91.4 for the month)
Jun 801.6 (101.9 for the month)
May 699.5

How can it be that LD costs fell 30% across the entire LD system from July into August? This is potentially a bigger deal than saving 10% on diner costs.

Since EVERY LD's costs fell in August, I don't quite feel comfortable drawing conclusions vs last August's Star, but do believe that we can validly compare any Star versus any Meteor in the same month. We use the Meteor as the experimental control for what we'd expect for a train "like" Star would do (except that they differ by a slight ratio)

Note bottom line in each code block below. Note that last August the Star costs 1.25 what the Meteor cost[/b] (its yearly max...maybe the added fuel cost of A/C for day running in Florida???),In August 2015, the Star was only 1.15 as expensive to run as the Meteor. Had the Star stayed "the same" as last year, we'd have expected a ratio of 1.25 again this August, but we saw a ratio of 1.15 this August (both fell a LOT as noted above, but as they fell, the Star fell more as a ratio to what the Meteor fell)

Thus far, using the ratio test:
From July 2014 vs July 2015, the ratio of costs Star/Metr fell from 1.07 to 0.92 (a .15 point fall, or a reduction of 14% ratio (-.15/1.07)
From Aug 2014 vs Aug 2015, the ratio of costs Star/Metr fell from 1.25 to 1.15 (a .10 point fall, or a reduction of 8% in the ratio (-10/1.15)

So this is still roughly in line with the Star having shed 10% of its operating costs when it shed its diner.
Recall that last year, direct costs of the Silver Star were $79.9m/yr. If the Diner were 10% of that, that's $8m/year (or $667k/mo), whereas total Sleeper Class Ticket Revenue was $7.4m ($617/mo).
This still means that Amtrak could afford to lose 100% of Sleeper revenue on the star, and they'd still be ahead 600k for the year.
But revenues are holding up way better than that (essentially flat) so we'd guess that cutting the diner is a pure $8m/year win ($8m saved, no net lost revenues can be attributed to the diner so far)
Jul: Star Sleeper Ridership +26.2%, sleeper revenues -1.8% (versus -3.7% for the LD system)
Aug: Star Sleeper Ridership +23.5%, sleeper revenues -6.0% (versus -7.1% for the LD system)

Jeff Smith wrote:Of course, this could just be a cynical attempt by Amtrak to either:

A - get one of the Atlantic coast trains discontinued. They'd have to move the Palmetto to cover the "inland" via Columbia route ...

Why would Amtrak be scheming to discontinue one of the Atlantic Coast trains? By good account these single-level trains are close to breaking even. Conspiracy theories fit the Western trains better, where losses are in the tens of millions on each route. But out West, Amtrak has worked hard to keep both the Sunset Limited and Southwest Chief on track. So the correct answer here probably isn't "A".

Woody, as I have noted here at other topics. Amtrak could be rid of the Meteor, but not the Star, without Notice under ARRA 97. The Palmetto would remain on the ACL (A-Line).

Of course, we must wonder how many "teeth" does that Notice provision have? Lest we forget, Amtrak successfully whacked Sunset East without Notice, and the odds are in their favor that when it's time to next whack something, Notice will "conveniently" be forgotten.

Amtrak did comply with Notice, when Three Rivers got whacked during '04 (the Bush "pruning"), but somehow, I think such provision is moot, when no recognized party objected to Sunset East.

Jeff Smith wrote:Of course, this could just be a cynical attempt by Amtrak to either:

A - get one of the Atlantic coast trains discontinued...

B - use the experiment to illustrate to those in Congress ... Mica ... who decry the food service loss, and not see it for what it is; a necessary loss to drive patronage on LD trains. Of course, those don't earn any money either. (Mica release quoted in full below)
...

I used to think maybe this explained it. Then I thought, I don't feel that any more facts would change Mica's position. For many in Congress, their views on Amtrak are the party line, sort of religious or cult like, and not reality based. Amtrak probably also concluded there's no point in setting up a possibly costly experiment for Mica. So "B" isn't the correct answer here either.

Jeff Smith wrote:... Have we established what caused the diner loss? Was it an experiment? An equipment shortage? Would a cafe car loss be any more or less than a diner?
...

Now we're on the real question.

I used to think that the 25 new Viewliner sleepers would solve the problem. They would allow adjusting the ratio of sleepers to diners on the Eastern LD trains, from 2:1 to 3:1 or 3.5:1 or even 4:1. In that way, increasing the ratio of passengers to the fixed dining car facility and staff costs would get things to break even.

But has Amtrak determined? -- and is its experiment on the Silver Star about to prove for all to see? -- that the goal of eliminating food & beverage losses can't be reached with dining car service as we know it at any ratio?

If studies on paper (an obsolete phrase, I mean, "on computer screen") showed there's just no way to make diners pay at any ratio of sleepers to diners, that's huge. It means abandoning the business model of sleepers-with-diners that the company has followed since before Amtrak began. In that case, I can easily imagine Boardman and the Board saying, 'We need a real-world experiment before take this plunge."

Arlington's post has left me gasping at the ramifications. Early results seem to show the Star doing better without diners, by $0.6 to $8 million a year, if I'm reading him right. How can this apply ONLY to the Star? How would the Meteor, the Crescent, and the Lake Shore Limited do without costly diners? If it's barely half a million a year saved per route, maybe not to upset things. But if it's $24 million a year saved by cancelling diners on the four big routes, they're goners.

If Amtrak won't be wanting new diners after all, or maybe not after they have in more results from the Star experiment, then they don't want CAF pushing 25 new diners out the door a.s.a.p.

No, then it's it's "Hold on", "Go slow", and "We may have a big change coming to our order." Like, 25 more Viewliner II sleepers instead of those diners? A bunch of "new and improved" Viewliner II cafe cars? Or even 25 Viewliner II coaches for a daily all-Viewliner Cardinal? It's purely my speculation. But if diners are done for, things will be very different very soon.

Arlington wrote:...
But before we look at the Star/Meteor, I begin with an all-LDs mystery (cross posted to the Amtrak Success Stories thread) of an overall huge (30%) reduction in reported LD operating costs: An effect so big that it has the potential to swamp any diner costs : For the last 3 months, the total YTD cost of ALL LD routes were:
Aug 960.5 (67.5 for the month)
Jul 893.0 (91.4 for the month)
Jun 801.6 (101.9 for the month)
May 699.5

How can it be that LD costs fell 30% across the entire LD system from July into August? This is potentially a bigger deal than saving 10% on diner costs. ...

Arlington, I've broken out this block of info because you should have made it a separate post, maybe in a more apt thread than Success Stories. LOL.

These observations should not get lost inside the Star results discussion, or worse, your important analysis of the Star results should not get lost.

Anyway, you pushed me into the weeds of the Monthly Report. Often it's cryptic to the point of being beyond understanding; I guess that's the point. But I did find this on page A -21.

Average cost per gallon of diesel (i)
$2.17 for August 2015
$3.22 budgeted (forecast cost)
$3.18 for previous year, August 2014

So it sure looks like fuel costs were down about 30%.

OTOH, on the same page,

CASM - Expenses per Seat Mile (b)
$0.182 for August 2015
$0.208 budgeted
$0.181 for previous year

WTF? How can Amtrak says its fuel prices plunged but its expenses per seat mile stayed flat?
Rather than wrestle with such an imponderable, I'm going out to ride my bike on this glorious autumn afternoon.

Arlington wrote:Note bottom line in each code block below. Note that last August the Star costs 1.25 what the Meteor cost[/b] (its yearly max...maybe the added fuel cost of A/C for day running in Florida???),In August 2015, the Star was only 1.15 as expensive to run as the Meteor. Had the Star stayed "the same" as last year, we'd have expected a ratio of 1.25 again this August, but we saw a ratio of 1.15 this August (both fell a LOT as noted above, but as they fell, the Star fell more as a ratio to what the Meteor fell)

Thus far, using the ratio test:
From July 2014 vs July 2015, the ratio of costs Star/Metr fell from 1.07 to 0.92 (a .15 point fall, or a reduction of 14% ratio (-.15/1.07)
From Aug 2014 vs Aug 2015, the ratio of costs Star/Metr fell from 1.25 to 1.15 (a .10 point fall, or a reduction of 8% in the ratio (-10/1.15)

But revenues are holding up way better than that (essentially flat) so we'd guess that cutting the diner is a pure $8m/year win ($8m saved, no net lost revenues can be attributed to the diner so far)
Jul: Star Sleeper Ridership +26.2%, sleeper revenues -1.8% (versus -3.7% for the LD system)
Aug: Star Sleeper Ridership +23.5%, sleeper revenues -6.0% (versus -7.1% for the LD system)

You compare costs directly between the Star and Meteor, yet compare revenues indirectly between them by comparing the Star vs all long distance trains? That's comparing apples to oranges in any book. What's the direct comparison on sleeper revenues between the Star and Meteor?

As for the cost ratios, they seem to fluctuate monthly. During July, the Star costs were cheaper than the Meteor, in August the Meteor costs were cheaper than the Star, without considering the percentages of the changes. A ratio above 1.0 means it costs more than the other, a ratio below 1.0 means it costs less than the other.
How do you explain why the Star still costs more than the Meteor to operate in August while using a cafe car instead of a dining car? I can't, but I thought maybe you could.

electricron wrote:You compare costs directly between the Star and Meteor, yet compare revenues indirectly between them by comparing the Star vs all long distance trains? That's comparing apples to oranges in any book. What's the direct comparison on sleeper revenues between the Star and Meteor?

Because the two trains don't interact on costs (they don't push/pull expenses back and forth) the Meteor can serve as "control group" for what a single-level NEC-Florida train costs. But on the revenue side, they potentially do act in "opposite" directions so comparing them to each other is a bit dangerous: price sensitive may have fled to the Star, or food-seekers may have fled to the Meteor.

electricron wrote:As for the cost ratios, they seem to fluctuate monthly. During July, the Star costs were cheaper than the Meteor, in August the Meteor costs were cheaper than the Star, without considering the percentages of the changes. A ratio above 1.0 means it costs more than the other, a ratio below 1.0 means it costs less than the other.
How do you explain why the Star still costs more than the Meteor to operate in August while using a cafe car instead of a dining car? I can't, but I thought maybe you could.

The Star is rolling for more hours per day and so always requires more staff-hours (of all kinds) to operate and fuel to haul (particularly when they both have diners). The Star also spends comparatively more of its hours baking in the Florida sun, potentially meaning it needs more air conditioning, or maybe more ice-making. That part is unclear. They are alike in many ways, but whatever ways they are different gets stated most simply in the ratio of the costs between the two. IFwe take the Meteor as the "normal"/"classic" NEC-to-Fla train, the Star, on the cost side, is traditionally a 1.08x "of normal" (or normally between 1.00 and 1.15)

That this August was strangest-so-far-this-year, just like August was, suggests that there's an annual "August thing" to look for (it could be random and we just happen to have gotten unlucky two Augusts in a row).

This past month, nothing was really normal, given a reported 30% cost cut across all LDs. That makes comparison much more surgical. You really need to know what you take as normal and what you reckon as "new"/"different". That's gotten hard this month.

Woody wrote: I used to think that the 25 new Viewliner sleepers would solve the problem. They would allow adjusting the ratio of sleepers to diners on the Eastern LD trains, from 2:1 to 3:1 or 3.5:1 or even 4:1. In that way, increasing the ratio of passengers to the fixed dining car facility and staff costs would get things to break even.

But has Amtrak determined? -- and is its experiment on the Silver Star about to prove for all to see? -- that the goal of eliminating food & beverage losses can't be reached with dining car service as we know it at any ratio?

I'd think that longer trains would at least help things.

In a typical long-distance train, 1/3 or more of the train is not really profit-generating: only 5 or 6 cars have fare-paying passengers in them. That's a recipe for disaster. No airline could have 1/3 or more of its planes used for non-fare-paying passenger (or paid freight) space.

With 2 locomotives having an ability to pull way more than 8 cars, Amtrak should think of ways to expand its train lengths. Perhaps add third-class seating in 1 or 2 additional cars? Perhaps add super-luxury sleeping car accommodations in 1 additional car? Those would help offset the space that is not filled with ticket-carrying passengers.

Its possible the dining car staff are still been charged to the Silver Star, I doubt they have been laid off for 6 months.
i think fuel costs are only 10 -15 % of total costs.