The study makes it obvious that the biggest cost (outrageous on the A-T) is the commissaries, not labor. Finding more efficient practices (out-sourcing the commissary function?) could reduce the losses considerably, while still maintaining the LD food service.
C&NW, CA&E, MILW, CGW and IC fan
I suggest you read page 3 of that report, which shows the breakdown on LD, short corridor and NEC food services. Very different numbers which show almost the entire loss from food service comes from LD.
LD food revenue = $63.5 mil.; total direct costs = $135 mil. yields a loss of $71.5 mil. of the total food service loss of $72 mil. in 2012.
So if the marketing study is correct, Amtrak would lose [one 's' only] $93 mil. in LD ticket revenue (losing 345,000 riders) by eliminating LD food services, but would also not have the actual $71.5 loss, so that the net impact would be a loss of $22.5 mil. not at all what you stated above.
It is almost like the commissary numbers don't make sense...
On another question, from the Amtrak OIG report OIG-A-2014-001, Page 14.
"The market research indicated... Amtrak would lose... $91 million in ticket revenue if food service on all short distance routes was eliminated... and $93 million in ticket revenue if dining car service was eliminated on all long distance routes."
So Amtrak can save $71 million in costs and loose $184 million in ticket revenue. That doesn't sound like a plan to stay in business. I can see trying to cut spoilage, discounting items about to expire by announcements, and improve stocking efficiency at the commissary level but the service that people want has to be kept if the marketing survey is to believed.
Perhaps this is a crazy question, but are foodstuffs, either refrigerated or not, offloaded if unused at the end of the run and returned to the commissary only to be restocked shortly thereafter? It would be nice to see a comparison of the improvements in food carts that the new Viewliner diners are supposed to have (I think they are refrigerated carts) and how that improves efficiency of the commissary operation. If the operation was so structured that would seem to have a large effect on the comissary costs.
Second question, are costs like fumigation or food service equipment assigned to the commisary?
The total cost per passenger for AT is $84.40, which is far more than double the per passenger charge for the Silver trains: ($12.81 and 14.83) It is double that of the CZ , which runs 3X the distance. It isn't from onboard labor, but rather the commissary.
ACYWhy are AT's Commissary costs so high in comparison? I doubt that my answer tells the whole story because I don't know enough about Commissary's operations. All Auto train supplies are provided by the Washington DC Commissary. Every day, a truck is dispatched from Ivy City to Lorton (about 20 miles or so each way) with 2 Commissary workers to supply the train for a round trip. That is an expense the other trains don't have to contend with. There is also a small Commissary in Sanford to supply supplemental supplies at that end. Every passenger eats dinner (there are no short-hauls), so it takes a lot of food and other supplies to supply the train's 2 full lounge cars, 2 working diner kitchens, and 6 sleepers.
On auto train it was noted at one time coach passengers also received meals as part of fare. Is that true today ? If so much less increase of fares needed to break even ?
schlimmIf Amtrak wants to provide more leverage to show the Prez's rail initiative isn't just money thrown down the drain, they'd better hurry up with some highly visible cost-cutting and vision focusing.
I think so. It doesn't even matter if the cuts cause equal revenue drop at this point.
-Don (Random stuff, mostly about trains - what else? http://blerfblog.blogspot.com/)
oltmannd The Auto Train is probably the easist LD to change since they serve one dinner after departure and then just a light continental breakfast the next morning. I would think that would lend itself to pre-plated meals, like a dinner train. No need to cook anything on the train - just warm and serve. I liked the wine and cheese on boarding and the "free" wine with dinner, but that's a "nice to have" thing.
The Auto Train is probably the easist LD to change since they serve one dinner after departure and then just a light continental breakfast the next morning.
I would think that would lend itself to pre-plated meals, like a dinner train. No need to cook anything on the train - just warm and serve.
I liked the wine and cheese on boarding and the "free" wine with dinner, but that's a "nice to have" thing.
Why are Auto Train's commissary costs so much higher than the other trains?
Thanks to thegreatpumpkin for some actual numbers. I may have misread, but if you could post the overall revenue and cost (including coach) for each LD train, we would have an even better and realistic picture of the current situation and what to do in the way of solutions.
oltmanndOne hopes that Amtrak's marketing folk know what they're doing - that they know the value of the things they are effecting and are making cost effective changes. But, even the best and brightest goof. JCP anyone?
Failure to identify and serve one's market niche is a prescription for retail disaster: K-mart, Sears, etc.
If Amtrak wants to provide more leverage to show the Prez's rail initiative isn't just money thrown down the drain, they'd better hurry up with some highly visible cost-cutting and vision focusing.
One hopes that Amtrak's marketing folk know what they're doing - that they know the value of the things they are effecting and are making cost effective changes. But, even the best and brightest goof. JCP anyone?
A coworker just came back from a trip on the Auto Train and reported the same rumors from the staff. I found it difficult to believe. I also told her to take crew rumors with the same level of seriousness that we treat rumors from Pilots and Flight Attendants, with a large grain of salt.
Re. ACY above:
This is upsetting news. I can understand, while disagreeing with, nickel-and-diming the LD trains elsewhere. But on Auto Train, the closest thing Amtrak has to a moneymaker? It makes no sense. One size does NOT fit all. You don't mess with success. Etcetera.
In the interest of keeping this board interesting until we who are not in the know do know what the big changes are, let’s briefly revisit the food and beverage service losses on LD trains reported by the OIG last October.
Disclaimer
Before delving into my over-simplified analysis, please be aware I do not have any experience in accounting, hotel and restaurant management, marketing, or operating a railroad. I have no agenda and I only looked at the available numbers in my own way, others are obviously welcome to come up with different analyses.
Introduction
I am looking at the published OIG numbers and combining them with a few other published numbers. There are many possible ways to reduce food and beverage service costs, and since I mentioned I have no experience in this area, I focused on raising revenue to match reported expenses. I will leave it to others to provide insight on lowering costs.
Palmetto
The Palmetto is included as an LD train, although it carries no sleeping cars and no dining car. Therefore I will use it to evaluate menu pricing since all passengers pay for what they consume. The food service revenue in the café car was $791,000 and the direct cost was $1,009,000, so the café car revenue covered 78% of the direct cost. This leads me to conclude the menu prices should increase approximately 25% to cover direct costs. This is over-simplified because it is only the café car.
Auto Train
The Auto Train coach and sleeping car fares both include all meals, and the Auto Train makes no intermediate passenger stops so all the passengers ride the entire length of the trip. Therefore, I will use the Auto Train to evaluate how much sleeping car fares should be raised to cover the cost of the meals included with the fare. The Auto Train carried 264,096 passengers in FY 2012. The Auto Train had a food service cost of $22,290,000 on revenue of $9,195,000, covering 41% of the cost. This results in food service revenue of $34.82 per passenger, and a direct cost of $84.40 per passenger. This leads me to conclude sleeping car fares should increase approximately $50 per passenger to cover the food included in the fare. This is oversimplified because the Auto Train offers different menus for coach and sleeping car passengers, and also has a café/lounge car. Although this trip is considerably shorter than most LD trains it is very similar to the Palmetto (855 versus 829 miles).
There are many other ways to digest the numbers for the other LD trains, which are combinations of length, passengers, average trip length, etc. Other interesting observations:
Silver Meteor
The best performing LD train (percent of cost) with both a dining car and a café car is the Silver Meteor. On the Silver Meteor revenue of $3,616,000 covered 65% of the $5,564,000 direct cost. If sleeping car fares were raised $50, the entire food service loss would be eliminated. This assumes that approximately 11% of the 375,164 passengers in FY2012 are in the sleeping cars (the percentage based on 2013 statistics by the National Association of Railroad Passengers). So why does the Silver Meteor food service revenue cover more cost compared to many LD trains?
Crescent
The worst performing daily LD train (excluding the tri-weekly Sunset Limited) is the Crescent. On the Crescent revenue of $2,793,000 covered 36% of the $7,810,000 direct cost. If sleeping car fares were raised $50, the food revenue would increase by an additional $1,481,000, but would still cover only 55% of the direct cost. Raising the menu prices 25% will not bridge the remaining gap for the Crescent.
Having ridden the Crescent last April, I noticed some oddities in the train schedule and train operation potentially contributing to the poor food service revenue. If the train is on time, it is due into Atlanta between 8:13 and 8:38 am going south, and 7:35 and 8.04 pm going north, so I suspect most passengers boarding in Atlanta eat a meal prior to boarding the train. When I rode the train last April the dining car and café were both closed (I witnessed the conductor lock the doors on the southbound trip) well before arriving in Atlanta until after departure (about one hour in the middle of breakfast and dinner). My planned southbound railroad french toast breakfast turned into late morning coffee only, and I skipped dinner entirely northbound due to this. The reason appeared to be related to a crew change in Atlanta, or possibly issues with Atlanta passengers not finishing meals before arrival, or both. Therefore, the opportunity for Atlanta bound passengers eating on the train is also limited. The Crescent also arrives in New Orleans at 7:32 pm, so New Orleans passengers may not eat dinner on the train (I had dinner in New Orleans after arrival). So maybe the Crescent is a candidate for a combined dining/café car like the Cardinal.
Cardinal
The Cardinal has a combined dining/café car serving pre-plated meals, and appears to me to be a potential model for reducing food service costs on trains like the Crescent. What is interesting is the Cardinal food service revenue only covers 49% of the direct cost, and the loss per passenger is higher than the Silver Meteor and Silver Star which both have a dining car and a café car. Is this the answer for some trains, or is more understanding of the Silver Meteor and Silver Star needed?
Conclusion
I know I do not have to ask for comments. However, if you have your own analysis of these or other numbers, please elaborate. I do not have any recent experience with the other LD trains to offer any informed opinions or analysis. However each LD train appears to be somewhat unique like the Silver Meteor and Crescent. Enjoy until we have more information about the big changes.
(The table below may not all be visible, it is hard to tell prior to posting, so I will post it in sections for those who like to see numbers and indepent verification)
ACYBig changes are coming, & I'm surprised nobody is commenting.
OK, would you like to tell us about them so we can comment?
Financially undercharging roadway users (automobile and freight) for the extra miles driven on the rural interstates cannot be ignored as a causative reason for loss of volume.
Another issue that should be considered was the mandated cross-subsidy of passenger service by freight revenues by ICC policy. Passenger fares were kept artificially low with the expectation that other revenues would cover the losses. Needless to say, that created a disincentive for maintaining passenger service.
Dakotafred...I don't disagree with you. There was no one factor as to why people left the trains. My references were more toward how railroads reduced income for freight by eliminating branch lines as an example of how they were thinking. But railroads really weren't interested in providing services for passengers because it cost too much to provide and they were led to believe structured schedules of passenger trains impeded the movement of freight (my take on that is that a structured passenger schedule forced a structured freight schedule thus a reliable freight service(. The other factor we are all missing hre is that the railroads had come to rely on the contracts with the United States Post Office to be the reason or need to operate any given passenger train or service. When Congress eliminated the Post Office and supplanted it with the US Postal Service taking the mail off the rails and putting on highways and roads the railroads quickly took passenger trains off the tracks. And I should also point out, at least in my case, a lot of these passenger services I saw were commuter main and branch line services in the likes of North Jersey and the New York City area.
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Passenger traffic on the branch lines was dying in the 1920s and Depression '30s already. Surely, its loss hurt the mainline trains, but the rails still responded strongly with diesels and streamliners. These thrived for a while, before dying in their turn.
To me, the rails did their best with the passenger trade for as long as they could, consistent with the interest of the folks who were putting up the money they depended on, the stockholders.
I know the why's of pruning the branch line passenger operations of the carriers before Amtrak - and with each pruning of a branch line, additional passengers were lost to the main line trains that the branch line trains fed to. The SYSTEM was dismantled - and considering the financil burden, rightfully so; the pruning of branch line feeder trains did not help the main line trains.
Never too old to have a happy childhood!
What Balt and Henry say above is simply not correct. I rode a lot of trains in the 1950s and '60s and saw the problem unfolding in front of my eyes. People simply quit the trains in favor of their cars -- on those nice new interstates -- and the new jet planes. I remember the spring day in 1969 on which, as the conductor informed our mail foreman, the City of Portland pulled into Cheyenne with FOUR passengers aboard.
The real killer was loss of the business, expense-account trade that is the backbone of airline service today. Take that away, and you'd see PLANE-offs to rival the train-offs of 50 years ago. In fact, I would be surprised if that isn't coming rather soon, given the leaps being made by modern communications.
Why do you need your corporate vice president's body in New York, when his face on a telecom screen and electronic signature will do just as well?
The railroads themselves killed off the passenger train services. The CPA's under the guns of the investor community, were able to prove that branch lines and passenger trains did not directly add to the bottom line and therefore had to be done away with. The additional carloads from branch lines were shown to cost money on the branch despite adding to the mainline traffic. Passengers needed people to attend to them and clear tracks to operate keeping precious cargoes in sidings awaiting their passing. You can't move freight on time when you got to time yourself to passenger schedules. But if you can put together make a 200 car train at the tidewaters of the Atlantic and keep the train moving until the California surfers can see it, a railroad will make millions of bucks. For the investors. But if you have to stop at one mill town for one car in the 3000 mile journey, then you'll lose your shirt. This is the investor railroading than killed the passenger train, not people not wanting to ride trains.
What killed the pre-Amtrak passenger rail system - was that with all the cuts the individual carriers were making - it ceased being a passenger rail system, as all the feeder routes were cut and thereby reduced the traffic available for the main routes.
No business has ever cut itself into growth!
Seems that the point that the Long Distance trains are a relatively poor use of (financial) resources has not been proved as the capital expenditures for the NEC at $600-800 million a year are being disregarded to make the case. If that is the case how about disregarding $500 million in one time capital for new long distance cars to increase the train length by 50%? This would markedly reduce the operating loss, as Train and Engine crews are an expensive fixed cost per mile irregardless, just as capital reduces the operating loss in the NEC.
An analysis has already been provided that shows the sleeping car class is already paying their incremental costs and more. A point by point rebuttal of that analysis is welcome. The amenities of the train are a joint expense of the service, the provision of which that has been experimentally proven to reduce the total subsidy by increasing the revenue to the train in all classes of service.
The point is to use resources wisely. LD trains are already a poor use of resources compared to other Amtrak services, using most of the subsidy while serving only a fraction of the total passengers. Streak gives the FL trains as example where about $2.00 is spent for every dollar of revenue.
In any case, I did not say sleeper service has to be dropped; only that the patrons pay the full cost. Some folks on here seem to be saying if they actually have to pay the cost for food and bed on Amtrak, they won't use it. Try selling that concept to the public. Ditto with food service: charge patrons the for what they choose to eat - no less, no more.
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