Denny's sign

The 'new' Denny's

Restaurant chain bounces back from racial bias charges


January 15, 1996
Web posted at: 2:45 p.m. EST

From Reporter Russ Jamieson

SPARTANBURG, South Carolina (CNN) -- Both civil rights activists and the Denny's restaurant chain say a lengthy effort to improve Denny's image has paid off. In began after thousands of African-Americans accused Denny's of discrimination. Shoney's, another restaurant chain, faced similar charges. The accusations recalled the early days of the civil rights, three decades ago, when black and white America faced off, sometimes over a lunch counter.


"If you discriminate, there is a consequence"

-- Ron Petty, CEO, Flagstar
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"The right message has been sent out"

-- Jim Holden, Denny's franchisee
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The first allegations surfaced almost three years ago. Six Secret Service agents said they were denied service at a Denny's in Annapolis, Maryland, while white agents in their party were served. At the time, a Denny's executive said the problem was due, in part, to the size of the group -- 21 agents. He also said the black agents were the last to order. But more bias claims followed, including charges that Denny's discriminated in hiring and promotions.

Working with civil rights groups and the government, Denny's eventually worked out a settlement, promising more minority vendors and franchisees. The restaurant also paid millions of dollars to African-Americans in a nationwide class action suit.

"Stupidity" corrected

Past practices at Denny's were the result of "stupidity," said Ron Petty, the new chief executive officer of Spartanburg, South Carolina-based Flagstar, the restaurant chain's parent company. Petty is generally credited with changing the company's business and moral course. "If you discriminate, there is a consequence," he said. By many accounts, Denny's has pulled itself out of the quagmire, developing and implementing what many see as a model program to improve the racial diversity of employees and franchisees.


Jim Holden is among those who has benefited from the change. His company, NDI, will soon be Denny's largest minority franchisee with 37 restaurants. "We saw an opportunity to build with Denny's," he said.

Change has to start at the top, Holden told CNN, "and we think Denny's has the right top." The National Association for the Advancement of Colored People agrees. Acting NAACP Director Earl Shinhoster calls Denny's "a good corporate citizen. They have responded ... there is ample evidence."

The response includes an innovative diversity training program. Everyone who works at Denny's will participate, said Flagstar's Ray Hood-Phillips. "If we can begin to have an open dialog, then we can begin to see where the other person is coming from."

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