North Yorkshire Moors Railway General Discussion

When Mulberries closed, despite Costa opening, Mrs Botham saw an opportunity and opened a fine tearoom that does excellent trade just opposite the station front door.

It's a huge asset to Pickering.

I agree with 60044, the station tearoom is too small, and feels too much like anywhere else, rather than having an old world cafe ambience. Boxes of supplies were stacked on the seats and the staff were struggling to cope in the open mini kitchen due to lack of space. Beamish it is not.

Buffet facilities on the trains are pretty minimal. The micro buffet is welcome but it looks like an after thought. The main buffet car is better, but still nothing like the ambience on the KWVR or the WSR. This year I thought the prices of food and drink significantly more expensive.
For some years there was a heroic lady working the trolley who cheered everyone up with her great sense of humour. I haven't seen her recently.
I went on the Pullman and thought the menu was much improved in quality and presentation. Clearly this is a jewel in the crown.

 

An interesting post. I think a lot of what it really boils down to is a distinct lack of broad commercial thinking and/or expertise in the SMT - it suggests that whoever is in overall charge has their own particular area of expertise but less interest outside that. I don't think that's the only area of the NYMR where that applies too.

 

It sounds as though the railway may have missed an opportunity to lease the Mulberries building to Bothams, who enjoy the benefit of local scale and production facilities… finding local organisations to partner feels like a way to create sustainable income whilst sharing set-up and operational risk and cost. It probably then wouldn’t be rocket science to leverage that relationship to flog some cakes and biscuits on trains and at intermediate stations, with benefit to railway and Bothams as a local business.

Anything that holds dross like Costa at bay is good, and partnerships are a good way to avoid the railway over-extending itself into territory it’s not well equipped to serve, yet still generate some income.

Simon

 

I've suggested before now that the NYMR should look for a partnership with someone like Bettys, to go with their more upmarket image. In fact I'd look to do it twice, once for a tea room at Mulberries, and again for a middle of the range eatery at the Station Hotel.

 

All interesting suggestions which can usefully be considered as part of the plan. Incidentally my recollection was that Botham's opened sometime before Mulberries closed so the two were in competition? I think I'm correct that part of the reason for closure of Mulberries was that the kitchen facilities required extensive and expensive upgrading to comply with hygiene regulations. In any event all the ideas and plans have the same problem. They all require significamt capital investment particularly on the fabric of the Station Hotel At the moment there are far more pressing calls on limited funding such as the replacement of worn out track and inadequate ballast that have necessitated a number of service affecting TSR's. As the recent sad experince of the SVR has confirmed the dagger pointing at the heart of heritage railways is the cost of repairing and replacing major infrastructure. It must be right to prioritise investment on projects to keep the railway operational.

 

If buildings require significant work on the fabric, why have they been purchased in the first place?

 

As explained earlier part of the reason is to ensure that we have a strategic resource to develop when funds permit. Mullberies was made possible by a generous loan and the Station Hotel by another generous gift of the purchase price which took account of its somewhat dilapidated condition. The NYMR has a poor history of missed opportunities to acquire strategic property assets only to regret the decision later. Member financial support ensured that mistake was not repeated.

 

Understood, though I see signs of Pournelle's Law being applicable to some of the proposed uses. I have a couple of times had the misfortune to work on "strategic" projects, where "investments" have actually proven to be liabilities.

If the ambition is limited to office space, it might be educative to test the proposition for what would happen if the space never became available for office use, and how administrative requirements could be met without expansion.

 

This is I guess not the right thread, but with your HRA hat on, what is your take on the overall position of let's say the top twenty heritage railways in terms of for example financial performance, traffic trends, volunteer trends post COVID? Clearly there are certain specific issues at the NYMR but I wonder if some of the specifics are really symptoms of more generic sector-wide issues.

 

An interesting question as over the past week or so I get an extreme sense of deja vu from about a year ago when many of the very same issues, timetable, catering etc were being thrashed to death on the Swanage thread.

 

The issues might be common, but the background circumstances are probably not, thus limiting the comparisons and thus the conclusions that might be drawn - and I suggest that's true across a wide variety of topics. For example, the SVR (and the GWSR for that matter) have a history of landslips, but the NYMR does not.

For once, reply that actually makes sense, the only sad part about it being the inability to make any sensible commercial use of either property. Offices, imho, are not a sensible commercial use. The P&DSR offices are mostly in a look-alike signal cabin, and are not huge!

 

I can’t speak for the HRA ( or the NYMR for that matter). My personal view based on contact with various people in the sector is:
Visitor numbers still to recover to pre Covid levels.
Family disposable income and capacity to spend on days out reduced but silver pound strong at the moment
Willingness to volunteer declining.
Coal price stabilised but quality is a problem.
Materials costs have risen exponentially.
Major threat is expensive infrastructure failure.
Recent Budget changes haven’t helped!
Regulatory compliance burden continuing to increase with more to come e.g Martyn’s Law
Quite a few railways have incurred operating losses. A common response is to cut back operating days and services.
General acceptance that the traditional business model of relying on fare income, secondary spend and member subscriptions to more than cover operating costs is irretrievably broken.

 

Taking the list as given, and accepting the proposition that the " traditional business model of relying on fare income, secondary spend and member subscriptions to more than cover operating costs is irretrievably broken", what is the view of how the gap should be covered?

In particular, I'm struggling to see where the balance should be between increasing income, and reducing expenditure - and especially how the focus should be split between fixed and variable expenses.

At work, given those circumstances, I'd expect to see limited room to increase price, and a lot of focus on finding ways to make fixed costs more aligned to variable. I'm not sensing that at NYMR, but instead a reduction in activity without much change to the fixed cost base.

 

Because , as suggested, the main fixed cost base is repair and replacement of infrastructure. Capex can be deferred but that simply mounts up as a bigger future challenge. Eventually spending on bridges, track, embankments, culverts etc. isn’t something that can be cut back or “ aligned with variable costs” without impacting the ability to operate at all.
The growing consensus seems to be that additional profit ( not just revenue) has to come from a combination of high margin products like up market catering footplate experiences etc. with new products or services that may have little to do with traditional railway operation. As the FD of a major player has observed if heritage railways remain just heritage railways they probably do not have much of a future. An example of successful diversification is the SVR initiative in reducing operating days and effectively hiring out the railway for commercial use. Diversification into new business ventures appears to be the likely key to survival.

 

I realise that it will be an unpopular view but part of the change needed may be in member expectations. Whilst they tend to be loyal supporters in terms of visits, contributing to appeals and leaving legacies there’s a worrying complacency that membership fees are helping to sustain their railways. In the NYMR’s case the net total of standard annual subscriptions generates around 1 per cent of turnover. Is that realistic? Many members of the NYMR Foundation that has helped fund critical developments are paying more per month than full members pay per year. Again it’s a personal view but members of heritage railways generally may need to dig deeper in their pockets if they want their railways to survive.

 

Thank you very much for your replies which are very clear. I come from a sector which is currently in financial trouble and the one thing I would say is that in that situation, all the staff above operating level need to be able to demonstrate, one way or another, that they are earning their corn. There is nothing more incendiary than a feeling among the troops that an overhead edifice has grown like Topsy and that the pbi are there to support it. I was in a role facing both ways where the need for clear communication in both directions was paramount, especially if the regulatory environment and/or the business model was changing. My aim was to be equally unpopular with the top of the office and the coalface!

 

The trouble is that the paid staff and especially managers are an easy scapegoat that appeals to populist sentiment. If cutting the wage bill was a realistic and quick way of dealing with financial challenge then it would have been done long ago.! I agree that communications need to be better but the truth of the underlying message will still not be accepted by some.

 

I don't think anyone would disagree with you about ongoing infrastructure costs. (Says he coming from a line with half a mile of tunnel that seems to rot the rails every fifteen years ...)

Where I diverge is I think in two areas, one of substance and the other perhaps more marginal.

The marginal one is that while I agree high margin products have a place, my view is you should seek diversity in income streams - that's a subtly different message than what you seem to be advocating, which is that high margin products are the only ones worth pursuing. There is a structural risk there that you become vulnerable to a cyclical turn down in business, just perhaps a different one to the railway that is still doing the "pile 'em high, flog 'em cheap" model of chasing mass numbers. In other words, it isn't one or the other, you need to do both. The more diversity you have, the more you have some insulation from individual sectors doing badly. That means footplate courses and fine dining, but also family events and fish & chips. Preferably with a few film jobs and some Rail Industry training thrown in for good measure ...

That point feeds into the more substantial one though, which is about your fixed costs - in particular the infrastructure ones. Railways are expensive to maintain, but they don't get particularly more expensive if you run more trains. I mentioned the rails in our tunnel: it is mildly acidic water that drains through the tunnel that kills them, the fifteen year replacement cycle would apply whether we ran every day or not at all. The recent SVR landslip would have happened regardless of the amount of traffic they ran. So those big infrastructure costs are going to be there anyway, but if you cut your passenger numbers, each passenger needs to shoulder a larger amount of that burden.

Of course these days when timetable information is more readily at hand, there is probably sense running five days per week rather than seven if you can carry the same number of people in those five days as you would have previously done in seven. But if you cut from seven to five and in the process you cut the passenger numbers, then something has gone wrong - you end up spreading your fixed costs over a smaller number of people which inevitably has an upwards pressure on fares.

Ultimately, in a business in which the major costs are fixed, I don't believe you can cut your way to profitability. Absolutely look at everything with a critical eye, but if services are at least covering their marginal cost of operation (including a per mile contribution to loco and C&W maintenance costs), it probably makes sense to operate them so as to spread the fixed infrastructure and business costs over the broadest possible base.

Tom

 

Thank you for this, and for your other reply.

In general, I completely share the view of @Jamessquared in his reply. I will add two points. The first, implicit in his reply, is that the income analysis seems to overlook the basic point that any business can only remain open if it generates more cash than it expends. I'd go further than Tom, and suggest that if an opening day only covers the direct costs of operation, it is likely to be a net positive for the business. The same applies to trains worked - the 2024 timetable seems very thin indeed, and to leave expensive wasting assets unused when they could earn cash.

The second is that there seems to be a disconnect between your general view (that operating profits are essential to providing sustainability), and your emphasis on capex costs for repairs rather than the underlying routine fixed costs, including but not limited to payroll.

As you observe, it is possible to defer capital expenditure, albeit at a long term cost - one that I think many railways are paying as asset lives run down. Meanwhile other costs, such as heat, light, and, yes, staff, are largely fixed - they are incurred regardless of mileage run AND represent cash out of the bank, week in, week out. For the sustainable surpluses to be generated that will meet those capital costs, assuming no grants will be available to cover that expenditure, it is necessary to both grow the top line and manage the bottom line.

If I may, I will then comment on tone. In your second reply, you throw down a gauntlet to enthusiasts about their giving. That's a fair challenge, and a worthwhile reminder that our annual subs are but a small part of the funding requirement. But in your manner of observing that members provide 1% of turnover at NYMR, you leave the impression that it's marginal revenue and not worthwhile. For a business that's losing money, that's a bold position - especially if it prompts members to take their money elsewhere.

 

I’m happy to agree Tom but there’s a big assumption…..that services are covering the marginal cost of operation! I assume that if they’re not you’d wield the axe?