honoluluadvertiser.com

Sponsored by:

Comment, blog & share photos

Log in | Become a member
The Honolulu Advertiser
Posted on: Sunday, April 7, 2002

Denny's sheds racist reputation

By Page Ivey
Associated Press

SPARTANBURG, S.C. — A decade ago, the restaurant chain Denny's was nearly synonymous with racism.

Some of the restaurants were accused of making blacks pay before they ate, not serving them as quickly as whites were served and sometimes not serving blacks at all. In one case, black Secret Service agents assigned to protect the president said they sat unserved until the whites around them had finished eating.

What resulted was a class-action lawsuit that was settled for $54 million in 1994 and pushed Denny's to make an amazing transformation.

Today, approximately half of Denny's parent company's 46,000 employees are minorities, 11 percent of them black and 31 percent Hispanic. Thirty-two percent of the supervisory positions are held by minorities, and for two straight years Fortune magazine has named it the "Best Company in America for Minorities."

"You will hear us all say here that that lawsuit was one of the best things to happen to Denny's," said Ray Hood-Phillips, chief diversity officer for Denny's parent Advantica Restaurant Group Inc.

As part of the lawsuit settlement, the company agreed to operate under a U.S. Justice Department consent decree and signed a Fair Share diversity pledge with the National Association for the Advancement of Colored People.

Through the agreement, the company increased the dollar amount of contracts with minority suppliers from zero in 1992 to $100 million a year. That accounts for 17 percent of the company's supplier purchases.

Meanwhile, the number of black franchisees has increased from one in 1993 to 64 this year. About 42 percent, or 450, of the company's franchised restaurants are owned by minorities.

"Denny's has stepped to the front," said Leighton Hull, a black franchisee who owns 14 Denny's restaurants in California, Hawai'i and Indiana.

Much of the credit has been given to Jim Adamson, a former Burger King executive and turnaround specialist who in 1995 was brought in as CEO of Spartanburg-based Advantica.

Adamson, who graduated from Damien High School in 1967, set about changing the perception that discrimination was an accepted part of the corporate culture. He did it by making inclusiveness and diversity a part of the way of doing business.

Every employee, from executives to wait staff, received training that emphasized respect for differences among people. Programs were implemented to recruit minority franchisees and managers. And management began to deal honestly with its problems instead of trying to explain them away.

"The way I gauge whether people are serious is what they do at the top — not what they do with waitresses and cooks, but what they do with the board and the big salary positions," said Darrell Jackson, a black South Carolina state senator who did some public relations work for Advantica during the height of its problems.

Jackson said that although Adamson has left Advantica — he's now leading the reorganization of Kmart — the infrastructure is in place to keep Advantica on track. Women and minorities make up almost half the company's senior leadership team.

But while Advantica has been successful in dealing with diversity, that success has not yet translated into profits.

The company, which also owns the smaller Coco's and Carrows restaurant chains, still carries a large debt load from a 1989 leveraged buyout that affects its ability to get the most out of its restaurants, said Andrew Ebersole, a securities analyst with KDP Investment Advisors in Montpelier, Vt.

The company reported an $88 million loss last year, compared with a $98 million loss the previous year. Revenues fell to $1.03 billion from $1.16 billion.

But the company cites positive numbers as well. Minority traffic increased to 61 million visitors in 2000 from 51 million in 1998. And systemwide, which includes franchise revenues, sales last year reached a record $2.23 billion.