Passenger Trains > Dining Cars as profit centers

Interesting perspective from Railway Age:

https://www.railwayage.com/passenger/amtrak-dining-cars-as-profit-centers/

The author states:  "Any capable restaurateur would love to deal with these Amtrak dining car metrics:  • Staff are professional union employees. No daily worry about someone skipping a shift, coming in late or leaving early. Hiring, payroll and benefits administration are handled out of a central location."
 

Did he overlook the fact that long distance train employees stay in layover hotels, incur overtime due to late running trains, holidays etc...


In the real world the people holding the purse strings are still asking the nagging question; what percentage of the meal should the taxpayer foot the bill for and how can that possibly be accurately determined? 



Edited 5 time(s). Last edit at 12/02/19 05:36 by Molino.

I'm sure there is a formula for that as there is for every business calculation...

Bill Deaver
Tehachapi, CA

Nicely written article, too bad there were no numbers.   It would be nice to see these articles published in the mainstream media where the non industry and non foamers would have an opportunity to read it and possibly engage in the topic.   

DevalDragon Wrote:
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> Interesting perspective from Railway Age:
>
> https://www.railwayage.com/passenger/amtrak-dining
> -cars-as-profit-centers

Yikes. In my experience, the author’s proposal that dinging cars could be a “profit center” is laughable. I’m not trying to be rude, but I cannot believe this was published online by Railway Age.

For context, I managed dining cars for a non-union contractor in the great state of Alaska. The company I worked for provides on board service for Alaska Railroad trains using Carnival Corporation owned equipment. The level of service provided is in line with what the author is proposing and is the closest thing to a traditional railroad dining car still operated in the United States. Real plates, white table cloths, fresh cooked-to-order food, flowers on the table, meal service not included in the ticket price, etc. Even charging "captive audience" prices and using non-union staff, the service would bleed buckets of red ink. The food & beverage service, despite being provided at an additional cost to the guest, is treated as a loss leader by Princess Cruise Line and Holland America Line in those companies’ cruise ship land tour packages.

Dining cars are labor intensive. To serve a dining room with 6-8 four person tables, it takes at least 4 employees. 2 servers, 1 cook, and 1 dish machine operator. Unlike a restaurant attached to the ground, staff remain on the clock for extended periods of time while not working, because they are still on the train until it reaches a terminal. Not only can management not send surplus staff home during slow periods, but staff earn a significant amounts of overtime, which is not normal in a traditional restaurant. It is important to consider that all staff are housed on the company's account overnight when away from their home terminal. The contractor I worked for is fortunate enough to have company housing in Healy, AK bringing costs down for the rail division to $40/per person per night.

The Alaskan contractor’s non-union bartenders and servers are paid below the standard federal minimum wage as part-time seasonal tipped wage earners. Their wages are extremely low for transportation work, but are in-line with wages paid by Anchorage area restaurants. Some of contractor's employees live in vans, section eight housing, hostels, and even homeless shelters. Most others live seasonally in small apartments shared by 3-5 co-workers. Even considering all of these labor cost advantages this company has over Amtrak, they still struggle to operate the service at a profit.

Food waste is a major unavoidable cost when providing food and beverage service on a train. If your goal is to not to run out of food for passengers, it means you have to overstock food items and toss waste at the end of a multi-day trip. The Alaskan company’s policy was that most prepped food needed to be thrown out after three days. Even if that food was kept safely frozen or refrigerated. This was to prevent any accidental food spoilage.

Employees, regardless if they are underpaid or well compensated, need to eat. Even if you have set limits on what staff can and cannot eat, without direct oversight from management, a cook can always choose to say he/she dropped expensive items on the floor if they want to eat/steal expensive product.

Costs associated with theft add up in not just lost product, but in the labor associated with inventory controls. The paperwork associated with tracking inventory and sales correctly is time consuming for both OBS and management. Think about all of the times you’ve been on Amtrak trains where the cafe closes 2 hours before the terminal so the LSA can do paperwork.

Unlike a normal restaurant, the manager can’t just slide into the back office to do this paperwork during slow periods. The company I worked for, only operated up to 3 daily trains each direction. They still needed 3 part-time accountants and 3 full-time year round food and beverage mangers to assist in processing this comparatively small load of admin work.

The author stated “diners have no cashflow worries; the head office handles all of that, including collecting from credit card companies, making payroll and paying vendors...” This is a specialized workload probably keeping dozens of managers employed at Amtrak. The author makes it seem like these costs can be magically absorbed. He also doesn’t understand that back office work done for food and beverage should be charged specifically to that department. Managing food and beverage is a cost of providing the service. Back office staff are also needed to work with vendors, including ordering food and beverage product/supplies. 

Warehousing/transporting temperature sensitive product in a rail yard isn’t cheap and easy either. Also, stocking and destocking trains at terminals takes a number of hourly workers. An Amtrak-sized system would require a sizable back office staff to plan, manage, and execute these essential terminal functions.

The author states, “dining cars have no local licenses to obtain or maintain.” He forgets to mention you have to meet federal FDA/EPA standards which are as strict as, if not stricter, than any local law.

 “...maintenance is handled by qualified mechanics as needed. Cleaning costs are handled automatically by crews at terminals.” This statement is uninformed. These unavoidable costs are a basic part of providing food and beverage service. They are not cheap and should absolutely be billed to the appropriate department, not absorbed by the terminal. A lot of time consuming work goes into  deep cleaning a dining car. Cleaning the floor, sanitizing surfaces, chipping ice out of the freezer, calibrating grills/ovens/flattops, cleaning grills/ovens/flattops, cleaning ice machines, cleaning the dishwasher, sanitizing the potable water system, etc. would all need to be done regularly. Keep in mind Amtrak’s coach cleaners are also unionized. 

Furthermore, maintaining a relatively custom built railcar kitchen can be extremely difficult for mechanical staff. In a union shop most kitchen appliances/systems would require labor from multiple crafts to do basic trouble shooting and repair. That is not a negligible cost.

I find it simply impossible to believe Amtrak, with unionized staff earning a living wage and benefits, would ever be able to profitably operate a traditional dining car while charging passengers less for food, as the author proposed.
 



Edited 9 time(s). Last edit at 11/30/19 19:09 by TWC.

After reading what TWC just wrote, I would have to agree that a full staffed dining car being operated with the union personnel absolutely cannot be profitable unless the patrons will pay extravagant prices for their meals and I mean extravagant.  If you look around, just how many successful dinner trains are there in operation today?  The maintenance alone on the passenger cars is expensive in today's environment.   Even if you could operate a diner using minimum wage workers cooking and serving the food, it is the high costs to maintain the dinning car period that will keep it from being profitable.  The only possible way any food service can be offered to even possibly break even would be a Food Bar type of operation where one person works and serves pre-cooked sandwiches and drinks, etc. in one small area of the car, with the remaining part being revenue coach seats generating paying coach passengers.  Even that might only be a break-even venture.
John in White Marsh, Maryland

On an ICE train between Berlin and Poznan last year, I had a tasty schnitzel, cooked (or heated up on board) by only one staff member who did it all. But volume in the car was light compared to what Amtrak normally deals with.

Thank the nasty private railroads and their freight shipping customers for subsidizing the pre-Amtrak dining cars.
That golden goose is long gone is no longer tethered to the passenger train.

When I rode the dinner train out of Beardstown, Ky. a few years ago I had to select my meal and desert while
making reservations.  Perhaps a system like that could help Amtrak reduce wastage.  

>>>>Unlike a restaurant attached to the ground, staff remain on the clock for extended periods of time while not working

How does this compare with the way in which flight attendants are paid?

SpeederDriver Wrote:
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> >>>>Unlike a restaurant attached to the ground,
> staff remain on the clock for extended periods of
> time while not working
>
> How does this compare with the way in which flight
> attendants are paid?

This article offers data by airline. In general, there is a wide range of pay and allowances for meals and food.

https://www.thestreet.com/personal-finance/how-much-do-flight-attendants-make-15177175

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SpeederDriver Wrote:
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> >>>>Unlike a restaurant attached to the ground,
> staff remain on the clock for extended periods of
> time while not working
>
> How does this compare with the way in which flight
> attendants are paid?

I'm not sure, but flight attendants also preform critical safety and operational functions.

It's a bit like asking the conductors to pass out drinks and snacks. I've only seen that on the Hoosier State. Some of those IND based crews really care about customer service.

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Edited 1 time(s). Last edit at 11/30/19 08:11 by TWC.

DevalDragon Wrote:
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> Interesting perspective from Railway Age:
>
> https://www.railwayage.com/passenger/amtrak-dining
> -cars-as-profit-centers/

Bruce Richardson lives in a fantasy world.  Its easy to see in how he chooses to present his case.

>Amtrak thinks the generation that recycles more than any previous generation will embrace throw-away plastic. In today’s society, any labor savings is offset by the higher cost (both culturally and environmentally) of everything being disposable plastic.

Its funny how disturbed by this he is. What's the cost of clayware and silverware, including washing, vs. using plastic? Which one really is environmentally friendlier?  Not stated. How long does the clayware last? Not stated. What cultural icons of today use disposable items? Chipotle. Food Trucks.  Starbucks. Subway. Not like it s unheard of or a gamestopper for "the recycling generation".

>A captive patronage of 31.7 million customers annually

Reality is the patronage is less than 1 million sleeper customers annually and potentially less than 1 million coach passengers travelling long distance.  Most of those passengers in his 31.7 million are on short distance corridor trains and are travelling for only 1 to 3 hours.  They don't even need a meal on-board. And the few million coach passengers on long distance trains are mainly travelling under 500 miles and are hardly captive - they could easily bring a sandwich with them for lunch or dinner if they even travel through a meal time.

>The food service operation is the only one available to customers​

This is only true for the longest of long distance passengers.  A sleeper rider boarding the Capitol Limited at midnight in Pittsburgh and going to Chicago with arrival by 9 am is not even captive for breakfast in the morning - they could just eat when they arrive.

>Many are onboard over several meal periods.

How many? The metrics are available. Why doesn't Bruce state how many Amtrak riders are on board for two or more meal periods?

>some on generous business expense accounts, others spending vacation money. Both groups often spend money more freely when traveling.

This is so completely out of touch with the reality of business expense accounts and vacation budgets as to be laughable.

>In the diner, most customers have pre-paid for their meals in the sleeping car fare

Have they really or is it a giveaway? How much of the sleeper fare is free meals? Does what is left of the sleeper fare even cover the basic costs of the sleeper service?

>Facility costs and most labor costs are covered by the pre-sold sleeping car meal plans;

Are they?  How is this demonstrated? How is the considerable cost of the commissary operation and back office captured?

>Menu prices for coach passengers can be reduced substantially and remain profitable at the margin.

How is this possible? Who does cover the actual overhead costs?  Most of the cost of diner service is the overhead of the commissary, car maintenance and turn-around, and financial accounting, not onboard labor.

>“No shows” by pre-paid customers are a financial benefit, not a problem.​

How does this work? The food is stocked and not used and most probably thrown away without being consumed. A no show adds disposal costs without producing any savings in consumables or labor.

>Dining cars have no utilities to pay;

Dining cars have to be watered (not free). They have to be washed and cleaned (not free).  They have to be plugged in at the terminal to 480V land power.  They have to go through intensive maintenance normal restaurants don't experience.

>They have no telephone or reservation service costs

Is the LSA role, who takes reservations and balances demand vs. tables available, not a reservation cost?

>technology can help eliminate deficits.

Technology costs huge amounts of money to implement and maintain in service.  Just look at Amtrak's technology budget.  There is a reason most restaurants still use paper and pencil to take orders.

>incremental sales to coach passengers are strongly deterred by needlessly high prices

Is there even capacity for this?  How many meals can a diner push out per hour?  Auto-Train has traditionally done 3 seatings for dinner of 2 hours duration each for a 72 seat diner. That implies an ability to prepare and serve 36 meals per hour of food requiring cooking or about 1 meal every 2 minutes.  That implies 216 meals over the 5p to 11p dinner period at best.   On Acela in first class from observation, it appears the 2 man crew can provide 48 meals to a sold out car in about 45 minutes, or about 1 meal per minute of pre-plated food needing nothing but reheating.  But the higher capacity model is what Bruce wants to get away from by going back to cooking everything on board.

>pre-sell meals to coach passengers at the time travel reservations are made and tickets purchased

This is one of the few decent ideas in the article.

>One of the reasons café cars, whether on long distance or short distance trains, do well 

Do they? Has it been demonstrated Amtrak makes money on the cafe cars?

>Extending the time the passengers are in the diner at their leisure usually means a pre-dinner drink or lingering over dessert or a glass of wine from a bottle ordered during dinner.

Extending the time passengers are in the diner means not turning the table quicker. The money is made selling the meal as a whole and getting the next set of customers at the table, not in having people hang out in the dinner ordering marginally less product per hour.  If you get $60 for selling two dinners and two drinks and that taking an hour to order, cook, and consume, you aren't doing better by having the same people sit at the table another 30 minutes but ordering just $20 of desert or drinks.

>Re-introducing the 24-hour dining car makes far more sense

This means crewing a train with additional staff, which also means providing additional dorm rooms. Does it really make sense? If it did, why have the railroads never done it?

>traditional white-tablecloth dining cars

What is the point of this except one more thing to clean, wash, and store?  Not many restaurants doing this anymore.  Why should the train?

>Amtrak sleeping car fares rival those of luxury resorts on a dollar-for-dollar basis, and sleeping car revenue contributes immensely to Amtrak’s bottom line.

And yet they still lose money on the operation.  And despite being half the consist and more than half the staff on the long distance trains, the sleepers and diner don't provide half the revenue of any of those trains.  The first class section of a typical long distance train requires an engine, a dorm, a diner and 3 sleepers while the coach section is typically an engine, a lounge, and 4 coaches.  The sleeper section maybe carries 16% of the total passengers and produces about 38% of the revenue.  Where is the "immense" contribution?  First class is a minority of ridership and revenue, but a majority of operating and maintenance costs.

If there is an "immense contribution" from the sleeper/diner service, how does the Palmetto make 73% of the revenue as the Silver Meteor with 46% of the operating costs?  This isn't an isolated comparison. The Pennsylvanian makes 67% of the revenue of the Capitol Limited on 33% of the costs.  The Carolinian makes 67% of the revenue of the Crescent on 29% of the costs.  Do people like Bruce Richardson and Andrew Selden just have their heads in the sand?

>Providing a decent dining car experience can go a long way to avoid that and encourage high-revenue repeat sales.

The numbers really argue for providing the most minimal possible first class experience and instead offering many more bare-bones type of trains like the Palmetto to grow ridership and constituency.  Which is Anderson's plan, and its almost certianly his plan because its what the numbers shout fom the roof tops.  If an overnight train must be operated with sleepers, it needs to be bare bones operation and the equipment simplified and minimized to reduce maintenance and costs and bring the contribution in line with expenses.The sleeper needs to be a Hampton Inn, not a Waldorf Hilton Curio Collection.  If there is a case for the National Park-esque land cruise service out west on the Zephyr or Starlight, it needs to either pay its way like the very expensive National Park lodges do, or be understood as some sort of subsidized service actually open financially to all Americans like our parks in general are.

TWC, that was one of the better insightful replies I've seen here on TO. Thank you for taking the time. It shows that in the real World dining on the train is a loser for the company.

The flight attendant passing out food and drinks is a bit like the people on the VIA Rail Corridor trains passing through the isle with the trolley thing. In Great Britain many of the trains use the same system, no dining or snack car just have somebody run a food trolley through he train. Arriva Wales did actually have a real restaurant (dining) car on one train. DB in Germany, like Anderson mentioned it's a small sized area for preparing everything. We're rather unique to have had dining cars stick for this long in the United States.

The author did make some other statements that sound good but don't actually work in reality. Of the 31 million people riding a year I think a lot of those trips are short enough that many of those people never visit the dining car or even the snack car...

Jim  

TWC’s critique of the article highlights several things:

First, it reflects the unfortunate pervasive attitude of an older generation of dying-out railroaders with  “but, but, but, we’ve always done it this way” and fails to attempt to take a forward view. This has often been the case with Amtrak, and its apologists, as noted in the article. Fortunately, the overall railroad industry is moving away from this dinosaur type of thinking and is embracing new concepts or rediscovering some of the best concepts of the past.

Second, it presumes an union attitude of inflexibility versus the ability to create more good jobs under new contracts, as well as the major strides which have been made with modern technology in a variety of areas, from food prep and storage to accounting practices.

Third, it chastises Railway Age for offering a variety of opinions, thus encouraging the current plague of the “cancel culture” and never allowing dissent or other views where any voice different from what someone perceives as their “norm” must be silenced because someone may exercise their right to have an opposite opinion.

Fourth, much of the validity of the critique is negated because he uses the insult to the professional railroader who is the author by saying the article and its thesis should be ignored because TWC has labeled it as “pure railfan fiction.”
 

A majority of restaurants don't operate with great deals of excess income. They can break even, and if they're really good, turn an okay profit. Add in the costs of the rolling platform with required maintenance, unexpected hours, bad ordered equipment, the -forbidden- occasioanl accident, and any profit goes away 10 fold.

johnpage Wrote:
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> Fourth, much of the validity of the critique is
> negated because he uses the insult to the
> professional railroader who is the author by
> saying the article and its thesis should be
> ignored because TWC has labeled it as “pure
> railfan fiction.”

What is Mr. Richardson's professional railroading experience?

At the bottom on the article the brief bio says he is an executive vice president of passenger services for Corridor Rail Development.

You may also recall he was one of the developers of the Sunset Limited 24 hour dining car project for Amtrak.

The same question may be asked of you: what is your professional railroad experience since you often offer your opinions here. Do you have direct experience with food service?
 

Thanks John. A professional article written by a professional in a professional publication.

          If all passengers paid $500 for every meal on an Amtrak train, the math wizards running the place would still cry that they are losing money. It will NEVER change.

So, how much do you think should be subsidized? 50%?

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