Friday, October 04, 2013

Amtrak: Five years to no food service losses

Written by  William C. Vantuono, Editor-in-Chief
Amtrak announced on Thursday, Oct. 3, 2013, that it “is moving forward with a plan to eliminate its food and beverage losses over five years.” The plan “builds on successful initiatives implemented since FY 2006 that have increased the cost recovery rate from 49% percent to 65%.

“We have made steady and consistent progress, but it is time we commit ourselves to end food and beverage losses once and for all,” said President and CEO Joe Boardman. “Our plan will expand initiatives that have worked, add new elements, and evolve as updated information and opportunities lead us to better solutions.”


 Boardman said that, in inflation adjusted dollars, Amtrak’s food and beverage loss is down $31 million, from $105 million in FY 2006 to a projected $74 million in FY 2013, “or about a 30% move in the right direction.

 Approximately 99% of the food and beverage loss is reported from the long-distance trains that Congress requires us to operate, specifically costs associated with the dining car service. Cafe car services across the system, on the other hand, essentially break even or make a positive contribution to the bottom line.

”

“The centerpiece of our plan is an improved management structure that consolidates operations and accountability for food and beverage into a single department,” Boardman said. “This new organization also establishes a long-distance services general manager and route directors responsible for profit and loss of specific trains who will identify opportunities for further cost savings and efficiencies.”



Among the opportunities: Aligning dining car staffing with seasonal changes in customer demand; establishing metrics to assess service attendants’ onboard sales performance; reducing spoilage; closely tracking onboard stock levels; regularly refreshing menus; and exploring new pricing and revenue management options to align with customer needs and enhance cost recovery.



“Further, Amtrak is using technology onboard trains aimed at improving customer service, automating financial and other reporting, and eliminating the error prone and time consuming method of manual data entry,” Boardman said. “Just this week, for example, we began a pilot on the New York-Miami Silver Meteor long-distance train to test a new touch-screen tablet-based solution that dining car service attendants use to take passenger orders and print customer receipts.”



In 2014, Amtrak will roll out its Point of Sale (POS) system across its national network. Currently in operation on Acela Express and California trains, POS technology “improves the customer experience by streamlining the check-out and receipt printing process in café and lounge cars, and allows onboard employees more time to focus on sales and customer service. It also provides real-time inventory status, better decision support, and more flexibility to introduce targeted pricing and discounts, including value and combo meals.

”

Also in 2014, Amtrak plans to test “cashless” sales for food and beverage on certain routes. “The elimination of cash reduces transaction time and significantly reduces accounting expenses and the risk of fraud or abuse,” Boardman noted. “In addition, many venues that have pursued similar initiatives have seen increased sales. This model is very popular in the airline industry and has been seen as a favorable change by travelers.

”

Boardman, noting records for ridership, ticket revenues, and ontime performance as well as a significant reduction corporate debt and the amount of federal operating support, said he is “confident Amtrak will succeed in this effort just as we have in other areas and across a wide range of financial and operating performance metrics. 

If Amtrak were to eliminate food and beverage services as some observers recommend, the railroad would actually lose more money because of the loss in associated ridership and ticket revenue, and thereby increase its dependence on federal support.


Amtrak Inspector General Ted Alves agrees improvements have been achieved, and testified before Congress that “over the past several years, Amtrak has taken action to reduce food and beverage losses and improve program management controls and these efforts have yielded benefits. We believe opportunities remain for further improvement.”

“This is great news for Congressman John Mica,” said an industry observer. “With any luck, he won’t have to hold press conferences at McDonald’s to complain about Amtrak’s food service losses.”

For additional perspective, see Railway Age Contributing Editor Frank Wilner’s June 24, 2013 blog, “What’s with Congressman Mica, the foodie?”