Amtrak takes flak over food service losses
10:20 pm August 2, 2012, by Jamie Dupree
A day after publicly pressing the General Services Administration over its travel and conference spending, a House panel turned its focus on Amtrak, charging that the national rail service regularly loses millions each year on its food service for passengers and has done little to rein in those costs.
"They've lost $833 million over the last ten years serving food and beverages," said Rep. John Mica (R-FL), who labeled those numbers "staggering."
“We have to end these unbelievable losses to the taxpayers," Mica added.
At a hearing, Mica went over the simple tally of how much you pay for food, and how much it really costs the taxpayer.
“It costs passengers $9.50 to buy a cheeseburger on Amtrak, but the cost to taxpayers is $16.15," said Mica. "Riders pay $2.00 for a Pepsi, but each of these sodas costs the U.S. Treasury $3.40."
To some on the panel like Rep. Lou Barletta (R-PA), whose family is in the restaurant business, the figures were hard to swallow.
"Obviously the business model here is not working," said Barletta, who joined the grumbling over why Amtrak can't just recover their costs on food and beverage service aboard trains.
Barletta made clear that technically, Amtrak is breaking the law, because Congress approved a plan many years ago that said the railroad must at least break even on food and beverage service.
The President of Amtrak, Joseph Boardman, told lawmakers that Amtrak has been improving its financial results in recent years; in 2011, he said the railroad recovered 59% of its food and beverage costs, as he rejected the idea of ending such sales on trains.
"If we were to eliminate food and beverage service, we would actually lose more money, because of the loss of associated ticket revenue," said Boardman.
The same argument was made by the head of the rail authority that runs Amtrak trains between Boston and Portland, Maine - their food and beverage revnue per passenger was $1.09 last year, but the expenses of providing that service $1.47.
That line had food and beverage service losses last year of almost $200,000.
As for numbers like that, the Inspector General at Amtrak told the same hearing that plans to improve the bottom line on food and beverage service aren't enough - that reforms are needed behind the scenes in terms of management.
"Two departments share reponsibility for food and beverage service," said Inspector General Ted Alves, "but neither is accountable for improving service and/or reducting direct operating losses - let alone eliminating them."
Some in Congress want to get Amtrak out of the food and beverage service entirely, and have it contracted to an outside group which might be more vigilant when it comes to the bottom line.
That drew a rebuke from an Amtrak employee who testified at the hearing.
"Why are some members of Congress promoting the elimination of good middle class jobs with decent pay and benefits?" asked Dwayne Bateman, who has been working for Amtrak since 1977 and is Vice General Chairman of a union that represents train service workers.
The issue of Amtrak's losses on food and beverage service aren't new. In 2005, a General Accountability Office report found that Amtrak food and beverage expenses were $487 million from 2002-2004, while revenues were about $243 million - a loss of almost a quarter of a million dollars in three years, about what the average is today.
Reviews by the Inspector General have found internal problems with crime, which also contribute to losses when employees provide items at no cost, steal inventory, short the cash register, or sell non-Amtrak items.