On-board food & beverage (F&B) service is expensive to provide, particularly in terms of labor, and dining cars on the long-distance trains (source of over 90% of Amtrak’s F&B losses) will probably never completely cover their costs through direct revenue. But diners are an essential component of the longer-distance train travel experience that, if eliminated, would result in ticket revenue declines greater than the current gap between F&B costs and direct revenues, and F&B losses account for only 3% of current overall passenger revenue. These are the main messages that Amtrak Chief of Customer Service Tom Hall urged passenger advocates to convey to their elected representatives in his address to the National Association of Railroad Passengers’ Council of Representatives at its fall meeting in Salt Lake City last weekend. (I serve on the NARP Council in an elected, volunteer capacity.)
In 1981, Congress changed the law to allow Amtrak to provide F&B only if the revenue generated from it equaled the cost of providing it. Since this mandate took effect in fiscal year 1983, Amtrak F&B revenue covers the cost of procuring the food and all logistics, but not on-board labor. The same amendment also exempted F&B service from the requirement that proposals which result in layoffs of Amtrak employees be negotiated with Amtrak’s labor unions.
States have always had the right to contract out F&B services on state-supported routes. The Northern New England Passenger Rail Authority selected a F&B vendor other than Amtrak for the Downeaster, and North Carolina provides its own vending machines in the cafe-lounge car on the Piedmonts. New York State conducted a short-lived experiment with franchising the Empire Service cafe cars out to Subway Restaurants in 2003.
In the mid-1980s, Amtrak experimented with replacing kitchen-prepared meals with microwaved airline-style meals on some long-distance trains’ dining cars. Over the two years that this was in place, ridership on trains with microwave meals dropped 13.6%, while all other long-distance trains’ ridership was virtually unchanged.
“Embassy Suites doesn’t make money on [the ‘free’ breakfast and cocktail hour it offers its guests], but the charge is embedded in the room rate,” Hall pointed out. “I make that point every time I go up to [Capitol Hill to testify]. It’s the same with the cruise industry.”
The quality of dining car service has gone up and down since the 1980s. Full dining car service was restored to all trains by the end of that decade, but standards sank again in the mid-1990s after Amtrak began implementing a consulting team’s recommendations. The carrier outsourced its 13 commissaries to Philadelphia-based Aramark (originally Gate Gourmet) starting in 1999. “Simplified dining,” which included replacing china with plasticware, was introduced in 2008. This reduced expenses by $16 million but resulted in 204 jobs being cut, Hall said.
Amtrak CEO Joe Boardman has committed his company to eliminating all F&B losses in five years. Hall says this will be achieved through labor optimization, improved on-board logistics, product development, enhanced supply chain efficiencies, training rewards, accountability, technology enhancements and product improvements. Servers will also be trained on upselling, encouraging passengers to spend more. A new point-of-sale revenue accounting technology has been introduced on the California corridor trains, to be followed by Acelas and Northeast Regionals in the coming weeks. This technology will relieve the crew of the burden of having to complete a good deal of paperwork, allowing the dining car to open sooner after departure and close closer to arrival at the final terminus.
Hall called this year’s cutbacks in amenities for sleeping car passengers (particularly the elimination of complimentary wine and cheese tastings on certain trains) “a difficult decision for us to make” that was based on a recommendation of Amtrak’s Office of the Inspector General. He said the cutbacks reduced expenses by nearly $1 million without an appreciable impact on revenues. “We’re working to bring some of that back,” he said, beginning with wine & cheese offerings that passengers may purchase on the Coast Starlight (in the Pacific Parlour Car) and on Auto Train (delivered to passengers’ rooms).
Most hotel and cruise line managers understand the concept of a loss leader, and realize that food & beverage service is meant to enhance overall revenue by making for an attractive package of accommodations — not to serve as a profit center in and of itself. But for whatever reason, those in Congress who hold Amtrak’s purse strings don’t seem to understand this. Luckily, this is something that we, as their constituents, have the power to change, if we make our voices heard.
Our community is FREE to join. To participate you must either login or register for an account.