The passenger rail provider has lost $609 million on snacks and beverage service since 2006.
Last week, Congress held the latest in a series of hearings on Amtrak's inability to manage its food service. That's putting it kindly. Amtrak has lost more than $609 million on food and beverage since 2006. The situation is so bad that the $72 million loss it posted in this area last year is considered real progress:
There are a couple ways to look at this news. The first is in the context of Amtrak's broader operations, which do lose money, but primarily on long-distance routes through remote areas. That's also where Amtrak is losing most of its food and beverage money — 99 percent of it, to be exact (see farther right column):
In that sense, it's possible to see the problem as a bit overblown. One might conclude that the difficulties with Amtrak's long-distance service simply extend to all the facets of that service, including food and beverage. There are several reasons to maintain long-distance routes — ridership is growing, for one thing, and they promote a truly national rail service — but there are systemic problems with them, too.
But the problems run deeper. According to testimony from Amtrak's inspector general [PDF], the train service may be losing even more money on food and beverage than it's letting on. That's because Amtrak transfers part of the revenue from its sleeper-class and Acela tickets to the food and beverage account. This practice was described in an I.G. report from October [PDF]:
For sleeper-class tickets, the amount transferred is based on the menu price of actual meals consumed by sleeper passengers on long-distance routes. On Acela, it is based on an Amtrak calculation of comparable meal prices that business travelers would pay at hotels in four cities service by Acela.
The four cities are Boston, New York, Wilmington, and Washington; all told the transfers since 2006 amount to $22.1 million.
Congressman John Mica, chair of the committee that held the hearing, said "Amtrak cooked the books to cover up food service losses." Mica's rhetoric toward Amtrak has always been extreme — he's absurdly compared it to a "Soviet-style" service — but it's hard to sympathize with the train here. The revelation plays right into the wasteful stereotype that Amtrak has fought so hard in recent years to overturn.
Amtrak does claim to be making steps toward addressing the food and beverage problem. For starters, it's in the process of preparing a five-year plan to eliminate food and beverage losses entirely. During his Congressional testimony, Inspector General Ted Alves offered six suggestions for improving the service. These tips include:
- Align dining car staff with ridership. On at least 13 long-distance routes, Amtrak doesn't coordinate staff needs with seasonal ridership changes. In fiscal 2012 that oversight alone led to nearly $7 million in losses.
- Align service to the needs of each route. The flipside of the food staffing problem is the food demand problem. On long-distance routes, Amtrak retains base dining car service throughout the year, even though ridership varies with the season.
- Recover the cost of complementary items. Some Amtrak routes offer complimentary food. The Auto Train service gives out wine and cheese, for instance, while three long-distance sleeper services provide wine and champagne. The practice cost Amtrak half a million in 2012 — not a ton, but again, catnip to a skeptical Congress.
- Reduce spoilage. Amtrak has a food spoilage rate above 8 percent. That's considered high and can be avoided by following some best practices already used by some individual state rail providers. For instance, the Downeaster, which runs from Boston to Portland, Maine, reduces food prices as expiration dates near.
These steps are a start. At an anecdotal level, Amtrak probably offers a longer and wider menu than it should; many Japanese trains pack all their food and drink options onto carts that roam the cars. Would Amtrak make more money replacing a café car with a passenger car on some routes? The question is certainly worth exploring.
But the bigger problem is the perception of waste — and engaging in practices like account transfers that, appropriate or not, enhance that perception. When you get as much financial scrutiny as Amtrak does, it's not in your best interest to give opponents even a morsel of a doubt as to your intentions.
Top image: Ben Schuman/Wikimedia Commons. Charts via Amtrak's inspector general.