Amtrak’s Food & Beverage service is under fire; what can they do? How about 24 hour service, “When You’re Hungry, You’re Hungry”!

Commentary by Russ Jackson, RailPAC-URPA, Dallas, Texas

Premise

Food and Beverage availability on long distance trains is essential and its existence is not negotiable; only the “how it is done” is.

Problem stated

“On Amtrak’s western long distance trains, the average trip spans three to four meal periods. People may want to go fast, but not to have to ‘fast.’ No food means no customers. But, the economic problem can and must be solved in a way that both radically increases the efficiency of any existing dining car service, and allows for growth in business from adding passenger cars to existing trains, all within the existing structure of the dining cars that Amtrak has.” — Andrew C. Selden

Analysis

On August 2, 2012, The U.S. House Transportation and Infrastructure Committee held a hearing to discuss this topic. The Chairman, John Mica, R-FL, is known to oppose almost everything about Amtrak except the Northeast Corridor. Amtrak CEO, Joseph Boardman was on the panel that testified, and his task was to defend the company’s service to its on board customers, many of whom are traveling long distances and have traditionally and rightly had food and beverage service available. Unfortunately, what resulted from this hearing, as has happened too many times before, were statistics that made the F & B service and Amtrak look bad: Amtrak “lost” $833 million on F & B services in the past ten years. Mica pointed out that it “costs taxpayers $3.40 for each can of soda” sold on trains, that there are huge losses per employee, and in a later event called a “stunt,” he went to a McDonalds with TV and reporters tagging along where he bought a drink and a hamburger for a dollar each, “but if you buy it on Amtrak it would cost taxpayers $6.65.” Politically, this is what Amtrak is up against for the foreseeable future although John Mica will not return as Chairman. No matter that the Amtrak cheeseburger is table-served in a sit-down facility that is in motion, that it is a real luncheon meal including lettuce, tomato, condiments, chips, and a drink, and is one of the best items on Amtrak’s dining car menu while McDonald’s is just a hamburger without any extras.

Was there anything positive to come out of that hearing? Well, yes, Amtrak’s IG testified that beginning October 1, 2012, as part of a company-wide reorganization all Amtrak food management functions will be transferred solely to Operations instead of being divided with Marketing. He has also recommended they try a pilot program to experiment with a cashless payment system, which is designed to stop employee theft but will inconvenience many riders and cause further lost sales. While theft has been a problem, it has been addressed and that effort appears to be paying off. Items like these are a re-stacking of the deck chairs with limited impact. There was nothing said in that hearing or in subsequent reporting that indicated a “growth” attitude at Amtrak, which would add revenue without sacrificing service to passengers.

For decades rail advocacy organizations like RailPAC and URPA have put forth pleas and evidence that revenue growth is basic to the future success of Amtrak and passenger rail. For example, the simple idea of adding an additional car to a train when reservations show the train on a specific date is sold out well in advance. In a letter to RailPAC a recently a retired Amtrak official cited the “company line” in reply to Dick Spotswood’s article about splitting the company into two entities which is posted on www.railpac.org and has been published in the Steel Wheels newsletter. The writer cited Mr. Spotswood’s list of costs of adding a car, but adding it also requires “A 10% revenue transfer to the train’s dining car. Sleeper revenue transfer and coach passenger car cash sales fall far short of offsetting the large cost of the dining car. Add another revenue car and you not only need an attendant but an Assistant Conductor.” So? There is no mention of the additional revenue obtained if one car is added to an already sold-out train on a spot basis. Sure, adding an additional car to all trains would add expenses, but has anyone figured out the enhanced revenue potential from doing so? Where is the “let’s try it” mentality?

Solution

There are positive, simple things that Amtrak could be doing to not only improve its financial results but also improve service to more customers, and, if implemented would result in Amtrak seeing F & B service as a “revenue center,” not a cost center. (These items are in the When You’re Hungry Plan below):

“Bring in higher-quality, distinctive, regional “premium” products that carry a higher margin. This was done in the Pacific Northwest, but mostly due to prodding by state partners; make sure the lounge cars and dining cars are open longer hours to bring in cash customers, not just the first-class passengers, who have already paid for meals in their ticket price. Every cash customer that comes through the door is gravy for the company, and a source of tips for the employees; eliminate the ridiculous early closings because employees want to go off duty the instant the train arrives in a terminal; eliminate the herd mentality of “reservations” for half-empty dining cars and rigidly fixed seating times that mostly exist to make things easier for employees; and eliminate the practice of “forced” seating of strangers together at the same table. This is a time-honored “railroad” practice that many riders like because they meet interesting people, but making it optional would remove a barrier for others.” — Paul Wilson

Some have proposed “privatizing” the F & B service on Amtrak. RailPAC’s Anthony Lee points out “In Europe privatized service exists on some overnight trains, and meal and catering services in daytime trains of France, Italy, Spain, Portugal and on Eurostar services operating under Newrest wagon-lits.” The likelihood of that being accomplished here is very low. URPA’s Andrew C. Selden writes that “Private contractors won’t come near Amtrak business as long as they have to deal with Amtrak’s union labor–costs, work rules (productivity), and intimidation. Remember the (failed) Subway Sandwich experiment to put food on the Empire Corridor trains?” That is an unnecessary fight that Amtrak need not get into. It isn’t the labor or food costs that are the problem it’s that the dining cars are open and serving only 10 hours a day, and the rest of the time are not generating a dime of revenue!

The “When You’re Hungry, You’re Hungry” 24-Hour Plan

Train Day dining car meal display

One of those “simpler things” was actually accomplished on Amtrak’s Sunset Limited trains at the end of the 1990’s by URPA’s Bruce Richardson when he worked as a marketing consultant for Amtrak. At that time Trains 1 and 2 ran across the continent, from Florida to California, which they should be doing today, and were Tri-weekly, while they should be daily. This was an experiment that worked to prove the concept!:

“Back at the end of the 1990s on the Sunset Limited a number of tests of running a 24-hour dining car were successfully completed. The passengers liked it, the employees liked it, the unions agreed to the tests. Revenues were up, employees were less stressed because passengers came into the dining car in a natural progression instead of a rigid reservations system, and employee tips were up because of passenger satisfaction. After management changes, the experiments died simply because of the new managers saying, ‘not invented here.’ ” — Bruce Richardson’s 2012 updated commentary on www.unitedrail.org

Employees like the 24-hour concept because there was the virtual elimination of peak times in the dining car. Employees are always on duty and one shift assumes responsibility from the other, (so that) no fatigue-enducing overtime is necessary.
Guests like the concept because they are allowed to eat when they want to, especially during breakfast and dinner meal times. Many guests will skip lunch and just eat two meals per day, and this makes possible a bedtime snack. The Sunset Limited serves major markets during nocturnal hours, so having the dining car open for boarding and detraining guests during these stop times makes it possible for those passengers to have a meal. In addition, safety and security were enhanced by providing all guests with a central location on the train where a member of the OBS crew can be found in time of need 24 hours a day.
The company benefits from the concept because both guests and employees have already embraced the concept as a result of testing the ideas, guests have more options with an open dining car, virtually all overtime is eliminated, costs are cut while providing a higher level of service, and employees offer better performance because of more sleep and rest. There are more opportunities for more services to be offered.

Meal times under this plan are Breakfast from 6 to 11 a.m., Daytime dining 11 to 5 p.m., Casual dining 5 to 6 p.m., Dining at “Sunset” 6 to 9:30, and Dining Before Sunrise 9:30 p.m. to 6 a.m. (The most popular item overnight in the experiment was a fresh bacon-fried egg-cheese sandwich on toast ‘with a hint of mayo’!) Sleeping car service would be 24 hours a day, with one attendant always on duty monitoring all cars. Work hours for the crew are staggered, giving employees down time at night on a staggered basis.

Already the objections can be heard, that this plan must increase costs. And it does add the requirement for two additional employees per trip to work the overnight hours, but the enhanced revenue pays for itself and more: In 1999 dollars, the projected revenue increase on the tri-weekly trains over the previous year was over $2 million, Labor expenses were nearly static, cost of food and supplies increased slightly, but the loss per meal or item was reduced from $9 to $.66. That’s 66 cents! How’s that, you cost cutters! Growth!!

Comment

Add two things and it is perfect: Have the cheeseburger meal available 24 hours a day, not just at lunch, and for safety sake sell alcoholic beverages only when food items from the menu are ordered. This plan is so simple and so logical in its concept it is amazing that it died such a bureaucratic death. The expensive failed “Diner Lite” and Cafe Car plans that followed did nothing to improve the problem and we are now facing the likely continuing hostility of the Congress. Many thanks to all our contributors from RailPAC and URPA, and we urge resurrection of this simple plan that adds no food service cars, requires nothing except a reorganization of the existing Food & Beverage service concept, and results in such a dramatic improvement in the financial picture for this service it should be enthusiastically embraced.

Photos by Russ Jackson and Alexander Friedman

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