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Denny's seeks to better its relations with blacks
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July 9, 1996: 8:11 p.m. ET
Chain seeks to remove racist image
From Correspondent Casey Wian
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LOS ANGELES (CNNfn) - Just two years ago the Denny's restaurant chain was hammered by charges that it discriminated against African-American customers and employees. The controversy alienated a huge portion of its customer base, and the chain paid the price.
Now, both in court and on its balance sheet, Denny's is fighting back, this time with tolerance.
The years 1993 and 1994 were contentious times for the chain. A string of lawsuits and protests gave Denny's a reputation as a place where African-Americans were not welcome. Denny's claimed there was little impact on sales, but the company paid more than $54 million to settle two class action discrimination suits.
Two years later, Denny's said it is changing. "With the leadership we have put in place at all levels of the organization, we've been credited now from going to being probably the last in the pack to the first in terms of diversity." said Ron Petty, CEO of Denny's.
Denny's transformation goes beyond better customer service. The company is promoting minority employees. Just three years ago, it had no minorities in upper management. Minorities now make up 11 percent of Denny's senior managers and 20 percent of middle managers.
Twenty six African-Americans now own Denny's franchises. Three years ago, there was only one minority owner. Bill Carlino, senior editor of Nation's Restaurant News, explained that the change resulted from new training programs.
"They've instituted a fast-track program where minorities can go through a management program and then be able to purchase a restaurant and become a franchise."
Of course, that is only half the battle. The restaurant must also convince the public it has changed.To do that, the chain has launched a media campaign using minority actors and minority-owned advertising agencies.
"I guess from our point of view, we were looking for a quick way of remedying this problem and we came up with using celebrities as a way to say to black people, 'Hey, if Bill Withers likes it, then it's a possibility that Denny's is O.K.,'" said to Jim Glover, president of Glover and Potter.
Denny's same-store sales grew more than 3 percent in the first quarter, when sales at the average family restaurant were flat. The chain has come so far that the CEO of its parent company this year received a corporate achievement award from the NAACP. 
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