Amtrak's $16 Burger

You can get $16 hamburgers at fancy restaurants, but it takes Big Government's Amtrak to sell hamburgers that cost that much AND incur a loss of $834 million over the past 10 years.

The secret? Amtrak sells microwaved burgers for $9.50, but pays out over $16 in food cost and labor:

Amtrak spent $1.70 for every dollar it earned on food and beverage sales last year, leading to a loss of $84.5 million on the service, according to information provided to the House Transportation and Infrastructure Committee this week.

Committee Chairman John Mica (R-FL) blasted the “inefficient and wasteful” record of the nation’s rail line, pointing out the substantial cost to taxpayers occurring with each transaction.

“Over the last 10 years, these losses have amounted to a staggering $833.8 million,” said Mica. “It costs passengers $9.50 to buy a cheeseburger on Amtrak, but the cost to taxpayers is $16.15. Riders pay $2 for a Pepsi, but each of these sodas costs the U.S. Treasury $3.40.”

Link

Update 8/10/12: The story at NY Times | GAO Report (2005) | Amtrak's own report (2011)

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Thanks Nfab - I'm trying to respond the best I can to all comments on the blog, but given the quantity, sometimes I drop the ball.

First of all, I've edited the post to include the link to the New York Times article you pointed out.

Let me address your comments in brief:

1. Regarding linking to a conservative blog: I've linked to both liberal as well as conservative blogs alike, without prior warning to readers that the link may have different political views than theirs. If you think I should provide a caveat that the link is conservative, then should I do the same for liberal sources? Where's the line: is a moderately conservative blog okay to link without a warning? Boy, that could escalate quickly.

Nevertheless, I don't intend to qualify my links in the future based on political preference. Looking back, I've actually linked to liberal blogs more often than conservative ones.

2. Big Government: The Federal government spent $1 billion a year to subsidize Amtrak. If that's not "big," then I don't know what is.

3. Re: Food management on rail is a difficult task - I disagree. Difficult is putting a rover on Mars. The problem with Amtrak's food management is lack of political will and problems with management. Or, as in Amtrak's own words "s internal control weaknesses that have led to and continue to make on-board food and beverage revenues and inventories vulnerable to fraud, waste, and abuse, such weaknesses and gaps remain. These control weaknesses and gaps allow certain LSAs to carry out schemes in which they falsify documents to conceal stolen cash or inventory. The fraudulent nature of these schemes makes it difficult to measure on-board losses."

Mind you that this is not a new problem. Back in 2005, the GAO identified the same faults and Amtrak has done nothing significant to correct it.

4. I will defer to your expertise on the founding of Amtrak. I learn something new on the blog every day, and this is one of it.

5. Regarding the vitality of the service - I concur that rail service is an important part of today's transportation network, and I have never called for Amtrak to be privatized. I'd like to see Amtrak improved - but ask yourself this: if they can't fix a problem as simple as food service in 10 years since Congress mandated that the food service be a break-even operation - mind you, not profitable, just break even - then isn't it time to try something new?
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Amtrak isn't a business and hasn't been from day one. Providing mass transportation is a public good and it has positive externalities. If I drive from New York to Philly, and you take the train, I benefit because you aren't in front of me on the road (particularly if you're going 45 in the left hand lane). I don't know you, I'm not going to mail you a check. So I use the government to subsidize your train ride. Likewise, if you live in Rugby, ND (the geographic center of North America), or Fulton, Ky (the Banana Capital of the World- long story) among many other places, we as a society have determined that you should have affordable intercity transportation. So we subsidize it for you. Call it pork, or graft, or earmarks (unless it's in your district, in which case it's called "jobs" or "investment" or "development"), but its a choice we as a society have made. Amtrak "losses" aren't losses, they're the amount we as a society, through our elected officials, feel is necessary to provide a level of service that we have deemed appropriate.

It's also stupid to set up a false parallelism between public and private goods. Sure, we want a cheap burger on an Amtrak train. But we also want transparency so we know who the burger was purchased from. And we want equity so that the burger contract doesn't go to somebody's cousin. And we want the person who serves it to us to have a living wage. And we want the same from all of the equipment to prepare the burger (ok, it's a microwave, but I'm sure there is a "Buy American" provision). What I'm saying is, when the "government" sells you a burger, it's more than just a burger. The cost of that burger (both what the customer pays and what the taxpayer subsidizes) represents a whole host of other factors that aren't just the beef, cheese, and bread. Do fraud and waste make up a portion of the cost of that burger? No doubt, and I'm sure Amtrak is going to work on removing those, But we need to remember even then, the burger very well may still be more expensive than a McDonalds burger. Private good providers pay taxes (sometimes), but unless you are a shareholder, you don't really have any control on forcing McDonalds to provide all those other things. We're all shareholders in the government, so we use that share to advocate for the things we want to see our money go for. 
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I would also note that your explanation on the creation of Amtrak misses some pretty crucial points.

First, up until the creation of Amtrak, freight railroads companies were required, by law, to offer passenger rail service over a certain percentage of their total trackage. This was to ensure that there was equity among freight railroads, since it was a money losing venture. The freight rail industry did, almost literally, come begging to Congress and President Nixon to help them - which is why Amtrak was created. The freight railroad were so desperate for relief from the passenger service requirements that they signed away massive concessions (they had to give away their passenger fleets for free, and ensure that Amtrak gets to use all of their tracks for free).

Second, there never was - and never could be - a "private rail industry." It was, up until Amtrak, tied completely to freight rail.

Third, it was then and remains today a vital service - as demonstrated by the fact that Amtrak's ridership has been growing by leaps and bounds every year for a decade. While there was definitely a slip in passenger rail usage (I blame Eisenhower and the interstate, but that's just me), it has always been an integral part of America's multimodal transportation network.
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Alex - thanks for responding. I really do appreciate how engaged all of the authors at Neatorama always are.

However, I would argue that you didn't respond to one of my more important points - that you point to a deliberately and overtly conservative blog without any recognition of that fact. Especially when it comes to issues like public transportation spending (and, more acutely, Amtrak), conservative pundits have a particular agenda they try to drive home.

I don't disagree that Amtrak selling $16 burger is ridiculous - the problem is, by linking to a conservative blog, you aren't telling the full story. That blog calls it inefficient and wasteful spending - but maybe we should instead look to the fact that food management on railroads is an incredibly difficult and expensive task (especially when talking about long distance lines, instead of just the Northeast Corridor). Why did you not instead link to the New York Times (http://www.nytimes.com/2012/08/03/us/politics/amtrak-lost-834-million-on-food-in-last-decade-audit-finds.html), which presents both sides of the story - including presenting Amtrak's explanations for the costs?

The implication of your post is that Amtrak does this without any care of the implications, but at their core they are a business - and no business wants to incur losses of that magnitude for everything (and, I would argue, things like this do run counter to their best interests as they try to push for additional funding for new projects). And by not linking directly linking to the report of the GAO, you are letting that outlet's personal agenda seep through, instead of presenting facts and using that to encourage debate.

I would also argue that while this may have all been unintentional , your choice of source - and your reference to Amtrak as "Big Government's Amtrak" - does seem like a political agenda (whether yours personally or just the influence of your source).
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