Dennys Learns to Manage Diversity

Abstract

The case discusses Denny's Corporation, the largest full-service restaurant chain in the United States, and the evolution its diversity management. During the early 1990s, Denny's was involved in a series of discrimination lawsuits involving cases of servers denying or providing inferior service to members of minority racial groups, especially African American customers. The restaurant chain acquired a reputation as a "poster child for racism." At the time Denny's had no diversity training and almost no members of minority groups held management positions, owned franchises, or had vend contracts. After a $54.4 million settlement for the discrimination lawsuits, Denny's rolled out an industry-leading racial sensitivity training program for all its employees. In 2008, Denny's had come to be considered one of the nation's best companies in dealing with delicate racial issues. It appeared on lists of top places to work for minorities and women, an indication that it has completely reversed its direction on diversity. Rapid technological change, globalization, the demand for skills and education, an aging workforce, and greater ethnic diversification in the labor market hadal contributed to making diversity management a high priority for Denny's and its rivals in the competitive U.S. restaurant industry. However, diversity also had negative effects on companies in the industry, and despite its commitment to diversity, performance at Denny's suffered. Hard evidence that managing diversity provided a discernable business advantage was elusive.