U.S. Congress to probe Amtrak's beverage, food losses, which have amounted to US$833.8M over last decade
August 6, 2012
(Industry Intelligence Inc.)
– A congressional committee is currently probing Amtrak’s beverage and food losses, which have amounted to US$833.8 million over the last decade, according to testimony at a congressional hearing, USA Today reported Aug. 3.
In 2011 alone, Amtrak’s beverage and food losses amounted to $84.5 million, the testimony noted.
Most of the losses were incurred via the company’s 15 long-distance routes, while some were due to theft, said National Railroad Passenger Corporation inspector general Ted Alves.
Accounting for overhead, Amtrak charges passengers less money than is necessary to cover its costs. For example, Amtrak charges $2 for each can of soda, while its costs amount to $3.40. Similarly, for cheeseburgers, Amtrak’s costs total $16.15 while passengers are charged only $9.50.
Amtrak President and CEO Joseph Boardman argued that the company would lose more money if they stopped offering food and beverage services, because these services attract riders.
Since 2000, Amtrak's ridership increased 44%. It hit a record high of 30.2 million in 2011, Boardman added.
Passengers interviewed by USA Today indicated that they preferred not to purchase food on the train.
Amtrak has been recovering an increasing percentage of its food costs, Boardman said. It recovered 59% of costs in 2011, up from 49% in 2006. The company’s goal is to recoup 70% of costs by 2015, he noted.
Potential solutions to the ongoing losses could include using food service carts or vending machines instead of the food and beverage service, replacing dining cars with café cars on long-distance routes, and contracting out Amtrak’s beverage and food services to the lowest bidder.
Currently, Amtrak uses its own employees to sell the items, which are supplied via contract with an outside party.
The primary source of this article is USA Today, McLean, Virginia, on Aug. 3, 2012.