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
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
"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)