Congress examines Amtrak's food and beverage losses

WASHINGTON -- Amtrak loses millions on its food and beverage service, and a congressional committee wants to know why.

The company's food and beverage cars have lost $833.8 million over the last decade, including $84.5 million in 2011, according to testimony at a congressional hearing Thursday.

The reason: the difference between Amtrak's costs and what it charges passengers. For example, taking overhead into account, each cheeseburger costs Amtrak $16.15 and each can of soda costs $3.40. But Amtrak charges passengers only $9.50 and $2 for those items.

Republican Rep. John Mica, chairman of the House Transportation and Infrastructure Committee, called the losses "outrageous."

"At a time that we're running national multi-trillion-dollar deficits, we have to look at every area of our government," he said. "There has to be a better way."

Ted Alves, inspector general of the National Railroad Passenger Corporation, said most of the losses come from Amtrak's 15 long-distance routes. Some losses come from theft.

Possible solutions include using café cars instead of dining cars on long-distance routes, replacing the food and beverage service with vending machines or food service carts, and contracting out the service to the lowest bidder.

"When you see the waste that is going on here, this is an easy fix," said Rep. Jean Schmidt, R-Ohio.

Kurt Weirich of Piscataway, N.J., who was waiting for an Amtrak train at Union Station in Washington on Thursday, said he always brings his own food on the trains. When told what Amtrak loses selling food and drinks, he was aghast.

"As a taxpayer, I support funding Amtrak for its rail operations. But I don't support funding a concession program that is losing money," he said.

Amtrak contracts out the job of supplying its trains with food and drinks but has its own workers sell the items. Schmidt has proposed legislation that would require all food and beverage operations, including labor, to be contracted out to the lowest bidder.

Democrats said the GOP-backed plan would eliminate 1,200 good-paying Amtrak jobs with benefits.

"I have had some good-tasting Whoppers in my time, but this is a whopper of a bad idea if I have ever heard one," said Rep. Nick Rahall of West Virginia, the top Democrat on the committee.

Mica responded that, "No one wants to fire anyone. No one wants to get rid of any employees. It's about losses that are staggering."

Dwayne Bateman, a food and beverage employee on Amtrak for 35 years, said that, unlike a regular restaurant worker, he's required to complete training that prepares him to help passengers in the event of a derailment, medical emergency or security breach.

"The work we do appears quite simple because people only see us serving a burger and soda. But the reality is more complicated," he said.

Amtrak is weighing whether to build a $151-billion high-speed rail line between Washington and Boston, and complete a $6.5 billion renovation of Washington's Union Station.

Joseph Boardman, president and CEO of Amtrak, defended the company's food and beverage losses, saying part of what attracts people to Amtrak is the availability of food on trains. He noted that Amtrak's ridership has grown by 44% since 2000 and reached an all-time high of 30.2 million in 2011.

"If we were to eliminate food and beverage services, we would actually lose more money, because of the loss in associated ticket revenue," he said.

Passengers weren't so sure.

"Food that I would want to eat wouldn't be on the train," said Dan Iradi of Frenchtown, N.J., as he gobbled up a sandwich at Union Station in Washington while waiting for his Amtrak train.

"I just as soon bring my own," said Cynthia Whitaker of Travers City, Mich., who was waiting at Union Station for an Amtrak train to Richmond.

Boardman of Amtrak said the railroad recovered 49% of its costs on food in 2006. That had jumped to 59% by 2011. He said the goal for 2015 is 70%.