Amtrak food service: every $1 in sales costs $1.70

[halik]

http://www.bloomberg.com/news/2012-...payers-834-million-in-10-years-mica-says.html

Almost makes it worth while to ride amtrak; coke that you get for $2 cost them $3.40 ... value proposition?

 

[cybrsage]

They need to seriously look at their costs.

 

[Genx87]

This is an American Treasure.

This shouldnt surprise anybody. Train service in this country is always subsidized heavily. Look at any mass transit system and compare the costs vs revenue generated from ride sales. A lot of them hover right around 30-40% of the cost of the fare being covered by the cost of the ticket. The rest is subsidized.

 

[spacejamz]

I don 't think there was one piece in that article that wouldn't piss off a tax payer...

 

[Infohawk]

If this loss is truly coming directly from the food service, how hard could it be to identify and fix the problem?

 

[Matt1970]

One more reason the Government shouldn't be running businesses.

 

[K1052]

This is an American Treasure.

This shouldnt surprise anybody. Train service in this country is always subsidized heavily. Look at any mass transit system and compare the costs vs revenue generated from ride sales. A lot of them hover right around 30-40% of the cost of the fare being covered by the cost of the ticket. The rest is subsidized.

All forms of travel are subsidized by the government.

 

[K1052]

If this loss is truly coming directly from the food service, how hard could it be to identify and fix the problem?

Easiest place to start would be to start dropping money pit long distance routes....something which Congress hasn't let them do.

 

[Genx87]

All forms of travel are subsidized by the government.

Nothing like rail in this country.

 

[K1052]

Nothing like rail in this country.

Auto travel. If people had to directly pay the actual cost for it they would shit themselves.

 

[Genx87]

Auto travel. If people had to directly pay the actual cost for it they would shit themselves.

On a per passenger mile auto is one of the least subsidized modes of transportation in this country. Rail, especially light rail leads the pack. That said I wouldnt have a problem with raising the gas tax to compensate for driving on roads if that money was spent on improving the road infrastructure and not diverted into trains or bridges to nowhere.

 

[Matt1970]

All forms of travel are subsidized by the government.

True but it's not like they are just handing Southwest or Jet Blue money. They have to fly to airports that are something like 100 miles from a major Airport. It's more so smaller cities can have air service that normally wouldn't.

 

[K1052]

On a per passenger mile auto is one of the least subsidized modes of transportation in this country. Rail, especially light rail leads the pack. That said I wouldnt have a problem with raising the gas tax to compensate for driving on roads if that money was spent on improving the road infrastructure and not diverted into trains or bridges to nowhere.

Taking into account the chronic road underfunding over the last few decades we're looking at $500ish billion for a state of good repair plus another $100B for major bridge replacement projects. Present Federal fuel tax yields about 5-6% of that total and it's purchasing power has declined against inflation/construction costs while liabilities rapidly increase as a result of lots of aging infrastructure. Also the Feds have dumped $30B of general revenue into the highway trust fund since 2008 and it's predicted to be insolvent next year.

The size of the gas tax increase that will be required for what you propose is a lot more than most people are prepared to contemplate.

 

[K1052]

True but it's not like they are just handing Southwest or Jet Blue money. They have to fly to airports that are something like 100 miles from a major Airport. It's more so smaller cities can have air service that normally wouldn't.

Most often it's seen in grants to build airports/runways. Usually there is a combination of landing fees and federal cash to do stuff like that but it's still another subsidy. Essential Air Service alone is going to be racking up a $200M + annual tab in no time.

 

[Darwin333]

How in the hell does it cost them $3.40 to sell a can of coke that I can buy four about $.50ea. I would bet that Amtrak gets a better price than I can at Wallyworld or at the very least the same?

 

[K1052]

How in the hell does it cost them $3.40 to sell a can of coke that I can buy four about $.50ea. I would bet that Amtrak gets a better price than I can at Wallyworld or at the very least the same?

Labor mostly. That can of coke might be loaded in Chicago but they've got to pay people to sell it all the way to Seattle. I would bet anything that the vast majority of the food/bev losses are on the long haul routes.

 

[Infohawk]

Easiest place to start would be to start dropping money pit long distance routes....something which Congress hasn't let them do.

What does that have to do with food services? That's my problem with this story. What is with the focus on the food services? Either there is a specific problem or it's just general complaining about subsidizing certain industries. If it's the latter, there is no need to bring up food services.

 

[K1052]

What does that have to do with food services? That's my problem with this story. What is with the focus on the food services? Either there is a specific problem or it's just general complaining about subsidizing certain industries. If it's the latter, there is no need to bring up food services.

Mica likes to harp on Amtrak's inefficiency. Amtrak is inefficient in many respects but congress has required them to be so. Amtrak is presenting it's vision for HSR/major station upgrades in the Northeast Corridor and Mica wanted to rain on the parade.

I would bet anything however that most of these losses are sustained on long distance trains which have much higher staffing requirements than regional routes. These long distance routes would have been gone ages ago if Congress hadn't stepped in and told Amtrak they had to maintain service in return for the subsidy.

 

[DucatiMonster696]

If this loss is truly coming directly from the food service, how hard could it be to identify and fix the problem?

That would depend on the political reasons (if any) that are behind these problems. If the problem is a result of government worker wages, or a politically connected supplier having a government backed monopoly on providing goods and services, etc the reality is these cost may not be dealt with properly (if at all) because their political ramifications rather then their economic ramifications maybe just to great or politically sensitive. Such is the nature of the beast when government involves itself in providing a service as it is bound to the chains of politicization of even the most innocuous business/economic related actions such as cost cutting or price increases.

 

[Matt1970]

Labor mostly. That can of coke might be loaded in Chicago but they've got to pay people to sell it all the way to Seattle. I would bet anything that the vast majority of the food/bev losses are on the long haul routes.

Also with food service regulations they can't just walk into a grocery store and buy soda off the shelf. It has to be through an approved distributor.

 

[K1052]

Also with food service regulations they can't just walk into a grocery store and buy soda off the shelf. It has to be through an approved distributor.

Yea and there is probably one master contract somewhere giving a single supplier the sole right to sell all the food / foodservice supplies to Amtrak. Presumably Amtrak gets a reasonable deal considering the huge territory they cover but who knows.

 

[Throckmorton]

Duh, this is public transportation. There's a reason government runs public transport and not private companies... because it's not profitable.

Do you know how much a mile of highway costs taxpayers?

 

[DrPizza]

Amtrak contracts out its commissary functions while using its own workers to serve food and beverages on trains.

Odds are, someone who is politically connected is getting one sweetheart of a deal.

 

[soundforbjt]

Odds are, someone who is politically connected is getting one sweetheart of a deal.

Exactly, like a case of pepsi costing the taxpayers $24 in Iraq for the army.

 

[MagnusTheBrewer]

If this loss is truly coming directly from the food service, how hard could it be to identify and fix the problem?

It's been identified, they contract out commissary operations.

How in the hell does it cost them $3.40 to sell a can of coke that I can buy four about $.50ea. I would bet that Amtrak gets a better price than I can at Wallyworld or at the very least the same?

They contract out commissary operations and they're paying the company $2 a soda although, I'm sure the the listed cost is less but, includes other various and sundry charges bringing up the cost.

Odds are, someone who is politically connected is getting one sweetheart of a deal.

Winner, winner, chicken dinner! The solution is for Amtrak to run their own commissary operations except they don't know how to do that (at least not anymore) so, they'd have to employ a professional management company and we're right back where we started. It could be done right but, I don't have any faith in government management.