Monday, August 6, 2012

Cheeseburger In Paradise

Cheeseburger in paradise (paradise)
Makin' the best of every virtue and vice (paradise)
Worth every damn bit of sacrifice (paradise)
To get a cheeseburger in paradise
To be a cheeseburger in paradise
I'm just a cheeseburger in paradise

Jimmy Buffett immortalized these lyrics, however, this story in The Washington Examiner would seem to indicate that the real Cheesburger in Paradise is consumed aboard an Amtrak train.

Taxpayers lost $833 million over the last decade on the food and beverages supplied by Amtrak, which managed to spend $1.70 for every dollar that received in revenue.

“Over the last ten years, these losses have amounted to a staggering $833.8 million,” said Rep.John Mica, R-Fla., in a statement previewing a House hearing today.  “It costs passengers $9.50 to buy a cheeseburger on Amtrak, but the cost to taxpayers is $16.15.  Riders pay $2.00 for a Pepsi, but each of these sodas costs the U.S. Treasury $3.40.”

" is currently selling 24-packs of 12 ounce Pepsi cans for $8.94 -- which
averages to about 75 cents per can."

If anyone, (I mean ANYONE) believes that government has any business getting into more business than they already are doing, they need to reconsider after reading this story. If you can't make money selling food and drink to captive passengers on a train, I think it is time to rethink the business model.

I thought it was also interesting to note that Amtrak has 1,234 employees in its food and beverage operation which lost $84 million last year. A business normally adds an employee when that employee can add profit to the bottom line. Adding value is what it is all about. In the case of Amtrak, the loss on the food and beverage operation actually resulted in a loss of $68,374 per employee.

I thought it was startling to begin with that Amtrak has 1,234 employees in its food and beverage operation. I could not find any information on comparable number of employees in the food and beverage operations of the airlines. Anyone have any information on this?

The Atlantic Wire also has a story on Amtrak's woes and cites a a govenment auditor's report that points the finger directly at bloated bureaucracy, lack of oversight, waste and theft.
Amtrak has been trying to figure out how to break even on food since Congress required it to do so in 1981, and it's never been able to, The New York Times' Ron Nixon reports. That's because two different Amtrak departments oversee food service, and they haven't coordinated with one another to stop losses, largely from employee theft, Amtrak inspector general Ted Alves told the hearing of the House Transportation and Infrastructure Committee. Some 87 percent of that theft happens on long-haul routes, Alves said. In a report last year, he outlined some of the schemes, including shorting cash register sales, inflating first-class meal checks, selling non-Amtrak items, and plain old stealing. Amtrak has some plans in place to counter that theft and waste, including a loss-prevention unit, more cashless purchases, and a better inventory-tracking system. But so far, Amtrak's food service program still costs it, and by extension us, a fortune.

I think it also interesting to look at a comparison of Amtrak compared to Southwest Airlines when looking at the relative efficiencies of transporting people from place to place. I used Southwest as its route structure is tilted to shorter flight distances than some of the other national air carriers and is more comparable to Amtrak's shorter train runs.
Amtrak employees                         20,000
Passengers                                     30.2 million
Profit/Loss                                     ($1.24 billion) loss
Revenue Passenger Miles(RPM)*   6 billion         
Passengers/Employees                    1,510/1
RPM Per Employee                         300,000                      
Loss Per Passenger                         ($41.06)
*estimate for 2011 based on this report

Southwest employees                     46,000
Passengers                                     128 million
Profit/Loss                                      $330 million profit before special items
Revenue Passenger Miles                98 billion
Passengers/Employees                    2,782/1
RPM per Employee                        2,130,435
Profit Per Passenger                        $3.17

Southwest is transporting almost double the passengers per employee that Amtrak is.  Looked at from the perspective of passenger miles, Southwest is transporting each passenger over 2 million miles for each employee compared to mere 300,000 for Amtrak. 

Southwest Airlines also details the yearly consumption of soda, juices and other refreshments in the "Fun Facts" section of their website.  Bear in mind that they are providing most of these items at no additional cost to passsengers and Amtrak is getting some payment.

In 2011 Southwest served 64.1 million cans of soda, juice, and water, 14.5 million alcoholic beverages, 22.6 million bags of pretzels, 92.1 million bags of peanuts, 22.2 million Select-A-Snacks, and 11.5 million other snacks.

No mention of cheeseburgers for Southwest.  Beyond Jimmy Buffett, cheeseburgers only find true paradise aboard an Amtrak train where both the passengers and the taxpayers are taken for a ride.

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