Amtrak lost more than $800 million on its food and beverage services over the last 10 years, largely because of waste, employee theft and lack of proper oversight, government auditors have found.
The railroad’s food and beverage service has never broken even since it was required by Congress to do so in 1981. The losses were the focus of a House Transportation and Infrastructure Committee hearing on Thursday that reflected partisan views over how Amtrak should be run. Republican lawmakers suggested that food services should be privatized. Democrats questioned the need for the hearing, saying the railroad was dealing with the losses.
Joseph H. Boardman, president and chief executive of Amtrak, confirmed the losses but said the railroad was taking steps to address the problem. “We are still looking for ways to improve our cost recovery,” he said.
According to audits by the Government Accountability Office, an investigative arm of Congress, and the railroad’s own inspector general, Amtrak loses about $80 million a year selling food. Since 2002, Amtrak’s food service has lost $834 million.
Amtrak said it was increasing the use of credit cards for food sales to cut down on cash thefts by employees, reducing staff, creating a better system to track inventory and to collect revenue. It has also set up a three-person loss-prevention unit.
Ted Alves, the Amtrak inspector general, testified that the bulk of the losses were on Amtrak’s long-distance routes, which account for 87 percent of the deficit. Last year, Amtrak spent $206 million in providing food services but collected only about $121 million. Long-haul routes do not include the Northeast Corridor between Boston and Washington.
“It’s an outrageous cost to taxpayers,” said John L. Mica, a Florida Republican and chairman of the House committee. “There has to be a better way. We can’t keep on paying this subsidy.”
According to the report, Amtrak’s own employees are likely stealing between $4-$7 million annually, or $40-$70 million over ten years.
Similarly, while the line sells soft drinks for $2, they actually cost the taxpayer $3.40. Hamburgers sell for $9.50, but cost the taxpayer a whopping $16. Therefore, even if Amtrak sold 100% of their inventory, it would still be impossible for them to turn a profit.
One Amtrak employee defended the unsustainable budget, saying: “You may just see us handing out hamburgers, but we do other things.”
Rep. John Mica (R-Fla.) held a press conference with a $1 burger from McDonald’s to demonstrate that if the private company can turn a profit with $1 burgers, a taxpayer-funded “Soviet-style” rail line selling $16 burgers should be able to at least break even.
“You may even see me on an Amtrak train with a sign that says, ‘Don’t eat the food, it adds to deficit spending,’” Mica joked.
But he’s serious about cutting taxpayer liabilities with Amtrak.
“They’re violating the law,” he said, “and I may look at some legal recourse to stop them from doing it.”