ANALYSIS: Client Profile - Denny's: turning around a company'simage is gravy. Denny's was once known for the headlines it served upmore than its food. It was also the butt of many a late-night talk showjoke. Not anymore

Robin Londner reports on the new Denny's, the best company in

America for minorities.

In 1994, Denny's was a company in crisis. The restaurant chain's parent

company, Advantica, had just paid $54 million to settle two

class-action bias suits. African-American customers claimed servers at

Denny's restaurants refused to wait on them, and that black Denny's

employees said offensive materials were posted on company bulletin


This year, for the second year in a row, Advantica (changing its name to

Denny's), has won the top spot in Fortune magazine's annual listing of

the 50 best companies for minorities.

The listing, published in July, is based on a Center for Responsibility

in Business survey that analyzes how companies compare on certain

issues: how well minorities are paid, how many are in management

positions, and how many minority suppliers and charities the company


So, how did Denny's PR director Karen Randall and her in-house staff of

three spread the word that the company long known as a cause celebre of

racism turned into the nation's top minority employer?

Randall had never faced a crisis like this before; she recalls NBC

comedian Jay Leno cracking jokes about the company on TV nearly every

night. Employees were upset, and customers were staying home.

Then CBS' current affairs show 60 Minutes called, wanting an inside look

at the company's troubles. "It was a real challenge to decide whether or

not we should do a piece with them," says Randall.

The company spent three months working with anchor Lesley Stahl.

Producers interviewed more than 100 company employees at six locations,

and Randall says she gave producers complete access.

Looking back, she says the story was a turning point. Then-CEO James

Adamson, now chairman, had been brought in to clean up the company's


He required Denny's 45,000 employees undergo diversity training, in

which they were read the Civil Rights Act of 1964 and told "not to offer

lesser service" to a person because of race, color, or national origin.

They were told not to ask for a green card or say things like "Speak

English; you're in America now." Adamson also hired more minority

vendors and suppliers.

Those and other changes were reflected in the 60 Minutes program, which

aired on April 26, 1998. "After the 60 Minutes piece, a man went into a

Denny's restaurant and gave $620 in $20 bills to the

manager," says Randall. "He said he wanted to give each restaurant

employee a $20 tip because of the story he saw on TV. We wanted

to keep that going, so our challenge became telling the story of this

new company."

How the story was kept alive

In August of that year, Randall and her team began an 18-month PR


In addition to $1.5 million spent on image advertising, Denny's

spent nearly $1 million on three projects: a documentary, a book,

and an event to help turn around its racist image.

Randall mailed a 27-minute documentary chronicling the Denny's story to

editors of minority publications and leaders of minority


The company also worked with publishing house John Wiley & Sons to

produce a book written by CEO Jim Adamson entitled The Denny's Story:

How a Company in Crisis Restructured its Good Name.

Randall, often using promotional funds provided by the publishers,

mailed book copies to the news media and civil rights leaders. She

arranged for Adamson to take part in a satellite media tour, print ads,

a website, book signings, and online chats with business and diversity


Finally, the company still had $1 million of the settlement money

that had not been distributed because the company could not locate

people listed in the claim. The Denny's legal department decided to cut

checks to civil rights groups, and Randall used the opportunity to have

Adamson and chief diversity officer Rachelle Hood-Phillips donate the

money at a media event in Washington, DC on Martin Luther King, Jr.'s


Throughout the campaign, Denny's used African-American PR and ad agency

Chisholm Mingo, consultant Jim Gray, and DC-based Walls


The company has never retained a PR agency of record.

Jim Gray, now associate dean at Duke University's Fuqua School of

Business for marketing and communications says the key to Denny's

success was management's commitment to change, and then to communicating

that change.

"We all learned quite a bit about matters of race, which is a

challenging area to communicate in because it's so deep and so

emotional," says Gray.

"A company has to value diversity deeply, and if they don't or they just

pretend to, it's just going to get worse."

Gray says Denny's did, indeed, grow to value diversity deeply, leading

to the sweetest victory of all when Fortune first named Denny's the top

company for minorities in 2000.

Getting off Leno's hit list

Randall says, "Our CEO wrote a letter, and we included a reprint of the

Fortune story, and we sent it to Jay Leno. We said, 'We know you pride

yourself on being on top of the news, and here's the latest news about

Denny's,'" says Randall.

"First Leno called and left a message. We listened to it, and sure

enough, it was his voice. Then he called back, and he told our CEO, 'You

make some good points, so I'm going to lay off Denny's.' To me, it was a

lesson. Who says you can't provide information to a comedian and make a


Randall, who has worked in Denny's public relations department for 16

years, says visits by African-American customers are up 20% from 1998 to

2000. On the PR side, she says the technology she learned during the

18-month campaign has forever changed Denny's communications.

And Randall says her department, which consists of a PR manager and an

administrative assistant, has learned something else from the

experience: how to persuade a major media outlet to help with the


The first Fortune story was a great sell, but Fortune magazine had an

"exclusive" arrangement with NBC's Today show. "We had this crazy idea

that we wanted to get our chief diversity officer on an audio news

release on black radio," says Randall. "We asked Fortune if there was

any way we could get the editor in on that too. To our amazement, they

said yes. We did that the day of the announcement."

It took five years from the beginning of Denny's cultural overhaul to

make the depth of those changes known to the public. Randall says the

crisis ended up being a positive change - a story she is still proud to


"You can't spin what you don't have," says Randall. "It became

abundantly clear to me in the early days that we had a lot of areas that

needed shoring up, and we've gone back and made a number of changes.

That's the beginning of a reputation change. Part two was communicating

those changes and communicating that we have a new company."

Denny's sales are up 4.8% over the past year. This can be attributed, at

least in part, to the restaurant chain's enhanced corporate


You can just ask Jay Leno - that kind of success is no joke.


Director of public relations: Karen Randall

Agencies used: Chisholm Mingo; Walls Communication

Consultant: Jim Gray has also worked with Denny's through positions held

at Manning Selvage & Lee, Brouillard, Citigate Communications, and Duke

University's Fuqua School of Business

Agency of Record: None

Annual budget: Would not disclose, but the 18-month diversity campaign

budget was $2.9 million (August 1998 - February 2000)

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