Introduction By 2013, Denny's had completed an intensive, almost two-decade long organizational transformation that brought it back from the brink of ruin. The change not only included addressing a problem of racial discrimination that had driven away customers and invited expensive lawsuits, but also a realignment of the franchise ownership structure. In 2012, Denny's Corporation was the leading full-service family-style restaurant chain in the U.S. The Company generated $488.4 million revenue in 2012, and owned and operated 164 of its 1,688 locations at the end of 2012; the rest were franchised or operated under licensing agreements (see Table 1). Table 1. Denny's Revenue and Locations, 2012 In 1994, Denny's had paid more than $50 million to settle two class-action lawsuits filed by African-American customers claiming that Denny's restaurants refused to serve them. When Denny's was hit with a series of classaction discrimination lawsuits in the early 1990s, it had no diversity training and almost no minorities held management positions, owned franchises, or were significant vendors. Denny's struggled from 1994 to 2008 to recapture sales from minority customers, and came to be a powerful example to other American companies of the importance of managing workplace diversity. After instituting Company-wide training, policies, and safeguards in the area of discrimination, and making efforts to hire more minorities across all ranks, Denny's came to be considered as one of the nation's best companies at 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 2 direction on diversity (Richardson 2006). Denny's management remained convinced that the diversity of its employees and customers would translate into increasing revenue and greater profits. Yet, in spite of the Company's commitment to diversity, performance at Denny's suffered; year-to-year sales declined at an average of 12% from 2007 to 2012. 1. Denny's Background and History Denny's was one of the most widely recognized names in family dining in the U.S., providing good food and service for more than 50 years. It operated restaurants in the United States, Canada, Curacao, Costa Rica, El Salvador, Japan, Mexico, New Zealand, and Puerto Rico. Denny's restaurants offered a casual dining atmosphere and moderately priced meals served 24 hours a day at most locations. Denny's was well-known for its breakfasts served around the clock, including the popular Meat Lover's Breakfast and Original Grand Slam. Denny's menu also featured a variety of appetizers, hamburgers, sandwiches, salads, chicken, steak and seafood entrees as well as desserts. In 2012, the Company owned and operated 164 restaurants, and another 1,524 were franchised or operated under licensing agreements. There were 8,000 employees at Denny's Company-owned restaurants. Denny's ended 2011 with sales of $538.5 million. The Company was publicly traded on NASDAQ (National Association of Securities Dealers Automated Quotations), under the ticker DENN. Denny's was founded under the name Danny's Donuts in 1953 by Harold Butler in Lakewood, California and initially served only donuts. One year later, the menu was expanded to include sandwiches and other food, and the store was renamed Danny's Coffee Shops. By 1959, there were 20 restaurants in operations, and the chain was renamed Denny's restaurants. By 1963, expansion through franchising resulted in a total of 78 coffee shops operating in 7 states. In 1966, Denny's made its initial public offering on the American and Pacific Coast Stock Exchanges; the additional capital and continued operational success allowed it to grow to over 1,000 restaurants by 1981. In 1987, Denny's was purchased by TW Services, Inc., one of the largest restaurant companies in the United States. TW Services changed its name to Flagstar Corporation in 1993. Between 1993 and 1997, Flagstar was in turmoil. The first racial discrimination lawsuits were filed against Denny's and Denny's diversity management program eventually followed. In 1996, Denny's CEO Jim Adamson (Figure 1) was named "CEO of the Year" by NAACP (National Association for the advancement of Colored People), but one year later Flagstar (Denny's parent company) filed for Chapter 11 bankruptcy protection from creditors. The company reemerged in 1998 with a new name, Advantica Restaurant Group, Inc., only to change its name once again to Denny's Corporation in 2002. 3 Figure 1. Former CEO Jim Adamson In both 2000 and 2001, Fortune magazine ranked Advantica/Denny's No. 1 in its list of "America's 50 Best Companies for Minorities." In 2006, Black Enterprise magazine included Denny's in its list of the "Best 40 Companies for Diversity." In 2012, Denny's ended its fiscal year with sales of $488,363 million and net income before taxes of $35,094 million. This contrasted sharply with its income before taxes of negative $6.1 million in 2005 (Denny's 2008). 2. Denny's Business Strategy Denny's brand had always been built on full service, 24 hours a day. Denny's restaurants generally were open 24 hours a day, 7 days a week. The "always open" operating platform provided a distinct competitive advantage. Denny's growth strategy was built upon providing quality menu offerings and generous portions at reasonable prices with friendly and efficient service in a pleasant atmosphere. Sales were broadly distributed across each part of the day (breakfast, lunch, dinner, and late-night); however, breakfast items accounted for majority of the sales. Denny's vision was to recognize that each customer had certain reasonable expectations that must always be met. These included quality food that tastes good; friendly, attentive servers who make customers feel welcome; clean, well-maintained surroundings; and prices that represented good value (Denny's, Company Information 2008) . Denny's vision was summed up in the proprietary slogan, "Great Food, Great Service, Great SM People ... Every Time! " 4 2.1 Industry Overview The restaurant industry was divided into three main segments: full-ser vice restaurants, quick-ser vice restaurants, and other varied establishments. Full-service restaurants included the mid-scale, casual dining and upscale (fine dining) segments. A large portion of midscale business was generated in three categories: familystyle, family steak, and cafeteria. The casual dining segment was characterized by complete meals, menu variety and moderate prices. The family-style category, which included Denny's, consisted of a small number of national chains, many local and regional chains, and thousands of independent operators. The casual dining segment, which typically had higher menu prices and generally offered alcoholic beverages, included a small number of national chains, regional chains and independent operators. The quick-service segment was characterized by lower average checks, portable meals, fast service and convenience. Overall restaurant sales had been rising just over 5% annually, however, the supply of workers, aged 16 to 24, the primary pool for restaurant employees, had been declining. To solve the problem, companies were hiring more retirees and immigrants, and were increasingly making use of automation. A slowing economy helped offset a shrinking labor force by keeping wages (often minimum) stable, thus posing less threat to profits. The restaurant industry was mature and rivalry among chains was intense. Restaurants had to deal with stiff competition, fickle customers, and low profit margins. Companies continue to grow through acquisition rather than through building new units, which cost upwards of $1 million even for a fast-food unit. In 2007, the industry had started to showcase additional subcategories, including quick-casual and home-meal replacement, which were two of the fastest growing segments within the food service industry. According to the National Restaurant Association, the industry sold $533 billion in 2008 and by 2012, the nation's 998,000 restaurants would achieve over $660 billion in sales, or 4 percent of the U.S. GDP (Gross Domestic Product). The quick-casual segment alone would experience double-digit percentage increases. According to the Quantified Marketing Group, although the quick-casual restaurant sector was still in its infancy, this segment would continue to dominate industry growth by dividing into even smaller and more specialized categories. Cereality and Peanut Butter & Co. were two examples of successful one-product concepts that emerged. Cereality was founded in 2003, served only cereal, and allowed guests to create customized cereal combinations with a number of toppings and choices of milk. Peanut Butter & Co. was a sandwich shop, started near New York University, that offered a menu made up entirely of signature peanut butter sandwiches. By 2005, the company had begun to expand nationally. Mature brands would have to reinvent themselves to stay competitive, and some national chains would be forced to reposition themselves in the face of new industry developments (Quantified Marketing Group 2007). 2.2 Competition The restaurant industry was highly competitive, and competition among major companies that owned or operated restaurant chains was especially intense. Restaurants competed on the basis of name recognition and advertising; the price, quality, variety, and perceived value of their food 5 offerings; the quality of their customer service; and the convenience and attractiveness of their facilities. Competition for qualified restaurant-level personnel remained high. Denny's domestic competitors in the family-style segment included a collection of national and regional chains. Denny's national competitors in the casual dining segment were IHOP (International House of Pancakes) and Waffle House, wherein Denny's ranked first, IHOP second and Waffle House third. IHOP had 1,535 (mostly franchised) restaurants, typically open 24-hours per day. In 2007, DineEquity, Inc. was formed from IHOP, and acquired Applebee's, one of the nation's largest dinner house chains with 1,970 restaurants. Waffle House was a privately owned chain of more than 1,500 restaurants; typically open 24 hours per day. Denny's also competed with dinner house companies (such as Applebee's, and the restaurant brands owned by Darden, Brinker, and OSI Partners), and with quick service restaurants such as McDonalds. By the mid-2000s, the quick service restaurants had upgraded their menus with entree salads, full breakfasts, and other such items in an attempt to capture sales from the casual dining segment. Denny's competitive strengths included strong brand name recognition, welllocated restaurants, and significant market penetration. The Company benefited from economies of scale in many areas such as advertising, purchasing, and distribution. Denny's compared with rivals and industrial averages are shown in Table 2 and 3 respectively. Table 2. Denny's Compared with Rivals Table 3. Denny's Compared with Industry Average 6 3. Discrimination Rears Its Ugly Head During the 1990s, Denny's was involved in a series of discrimination lawsuits involving several cases of servers denying or providing inferior service to members of minority racial groups. There were three notable incidents. In San Jose, California, a group of Black teenagers were refused service unless they agreed to pay in advance. This was the first recorded incident of such an event, yet more and more similar incidents came crashing down on the popular casual dining chain (Labaton 1994). Six Asian-Americans of Syracuse University visited a Denny's restaurant late at night and waited over 30 minutes for service. As White customers were regularly seated and waited on, these six students were kept waiting. When they complained, they were forcibly ejected from the establishment by two security guards. Outside, they were beaten by a mob of White customers who spilled out of the restaurant while guards stood by and did nothing. The students were pushed, shoved, jeered, and racially insulted while others stood by and watched. Three Black students who observed the incident were threatened with mace by guards when they attempted to aid the Asian students. Two of the students were knocked down unconscious during the assault. (Guillermo 1997) In 1993, six African-American Secret Service agents were denied service at a Denny's restaurant in Maryland. The agents stopped for breakfast at a Denny's Restaurant in Annapolis. Six African- American agents sat together at a table, and the other officers sat elsewhere. The six African-Americans who sat together did not get served in the 55 minutes they were in the restaurant; the other table of agents, (which included one African-American agent sitting with White officers), did get served (Labaton1994). Countless other incidents similar in nature occurred throughout the Denny's chain. After the six officers filed a lawsuit for discrimination based on race, thousands of other customers reported that they had experienced similar discriminatory incidents at Denny's Restaurants nationwide (Labaton1994). Eventually, the lawsuit involved class members in 49 states. The U.S. Justice Department investigated what would become the largest such case at the time under the public accommodations section of the 1964 Civil Rights Act. Denny's reputation plummeted. News papers, magazines, radio talk shows and television shows repeated and retold the discrimination incidents at Denny's. Cartoons appeared in newspapers making fun of the chain. Television comedians Arsenio Hall, Jay Leno, and others poked fun at the restaurant chain. In his monologue on The Tonight Show in May 1993, Leno quipped: "Denny's is offering a new sandwich called the 'Discriminator.' It's a hamburger, and you order it, then they don't serve it to you" (Kohn 1994). 7 3.1 Denny's Response to the Lawsuits The original reaction by Denny's top management was that the discrimination cases were isolated incidents. But sworn statements by employees described instances of Denny's managers teaching restaurant operators how to discourage black customers, and some former restaurant managers told of a policy, that required certain customers (which the managers understood to mean black customers) to pay cover charges and for meals in advance of being served. Top management was determined to contest the lawsuits, even as the evidence of wrongdoing piled up nationwide. To get Denny's out of the headlines, Flagstar, the company that owned the Denny's chain, signed a pact in 1993 with the NAACP pledging to hire minorities and increase purchases from minority owned businesses. The NAACP and Flagstar also agreed to participate in a jointly administered program to ensure that Denny's customers were treated fairly. According to the lawyers and plaintiffs involved in the class-action suits against Denny's, the NAACP agreement may have been a step in the right direction, but it did nothing to address the past discrimination. Eventually, the Company conceded defeat and settled the class-action lawsuits. By December 1995, Denny's had paid out $54 million to some 295,000 customers and their lawyers (Labaton 1994). In addition, Denny's signed a consent decree, which placed the corporation under an extensive court order to provide nondiscrimination training to its employees and to monitor and report future instances of discrimination. In 1993, the year of the worst racial incidents, Denny's sales declined considerably. Operating income declined 30 percent from the previous year. The lawsuits also affected the Company's public perception. A 1997 study indicated that nearly 50% of African Americans associated the restaurant chain's name with racial discrimination. 4. Workplace Diversity Workplace diversity referred broadly to the protection, respect and inclusion of the entire package of attributes that each employee contributed to the workplace. While companies initially paid the most attention to those characteristics that were protected by federal and state equal employment opportunity laws (such as race, sex, religion, national origin, sexual orientation, age, and disability); businesses were increasingly seeking to build company cultures that respected life experiences, languages, talents, skills, thought processes, and personal styles. Different skills, experiences and backgrounds in the workplace, it was thought, could foster business growth, innovation and success. While companies retained the internal focus on attracting and retaining a diverse workforce and fostering a culture of inclusion, they were also adding an external focus that recognized the diversity of their customers and vendors and the communities in which they operated. In 2008, many companies were developing far-reaching strategies that relied on the input and expertise of diverse workforces to compete in increasingly global and varied markets. Furthermore, they were recognizing that a global diversity commitment might translate into unique programs, products and services in different parts of the world. The trend was to intensify, as global commerce continued to bring different cultures, values and practices into contact with one another. 8 4.1 Denny's Reverses Direction on Diversity The real work of turning around Denny's began when CEO Jerry Richardson stepped down in 1995. It was reported that Richardson wanted to devote more of his time to his football team, the Carolina Panthers. Richardson was replaced by Jim Adamson, who let all employees know from the beginning that he wanted to provide better jobs for minorities and women. Adamson devised a four-part strategy for Denny's cultural construction: Loosen up the hierarchical environment; Make diversity a performance criterion for all managers; Require the entire staff to attend workshops on sensitivity; and Never miss an opportunity to preach the "gospel of diversity." In 1995, Adamson hired Rachelle Hood-Phillips as Chief Diversity Officer to help turn the Company around. She was the nation's first diversity manager to report directly to a CEO. When Hood-Phillips joined Denny's, her priority was to interface with 70,000 demoralized workers who had largely been considered guilty of racism by association (Adamson 2000). Under Hood-Phillips's direction, the Company would spend millions on diversity initiatives that brought legions of new minority managers, franchisees and suppliers into a Company formerly run almost exclusively by White males. In 1994, before Hood-Phillips hiring, there were no franchises owned by an African-Americans. From 1995 to 2000, Denny's redirected 14 percent to 15 percent of its marketing budget to campaigns aimed at minority customers. The Company spent as much as $14 million in one year on the effort. The Company's first goal was to get rid of employees at all levels who failed to embrace its diversity initiative. Next, Hood-Phillips developed a system that evaluated and reported the initiative's progress quarterly. The CEO and board of directors, as well as representatives of the NAACP, were involved in monitoring the system. Hood-Phillips continued to focus on serving as the Company's point person in an ongoing quest. She instituted mandatory diversity-training sessions for every worker at every level of the Company, from cooks and cashiers to the Chief Executive Officer. From the ground up, HoodPhillips built the materials and structure that made the turn-around of Denny's image possible. Hood- Phillips developed initiatives to monitor progress in every area of Denny's operations, paying close attention to strategic decisions and actions of senior management and board members that affected everything from purchasing to philanthropy. Denny's had no minority suppliers or contractors in 1995. Hood-Phillips pushed its buyers to dole out business to minority-owned companies and hunted up contacts to help advance the effort. As a result, between 1995 and 2000, Denny's spent $616 million with minority suppliers. Denny's had never directed charitable contributions to minority-related organizations. That changed in 1995, when the Company gave $1.3 million to civil and humanrights causes. And recruitment of college graduates, which had been aimed largely at top national business schools, 9 was revised to include smaller, less well-known schools that more minorities attended, particularly historically Black colleges. In 2003, Denny's led a campaign to raise funds for its "Re-ignite the dream campaign" aimed at promoting Martin Luther King's legacy (Mehegan 2003). Denny's reserved 20 cents from the sale of every All-American Grand Glam breakfast, and in 2004, Ray Hood-Phillips (Figure 2) proudly handed a check for $1.2 million to Coretta Scott King, widow of the civil rights leader, for the King Center in Atlanta (Adamson 2002). Figure 2. Ray Hood-Phillips 5. Rachelle Hood-Phillips Former CEO Jim Adamson, wrote: "If there was one person who had led the way in moving [Denny's] toward an inclusive workplace, it would have to be Ray Hood- Phillips." Nicknamed 'Ray', Hood-Phillips grew up in the central city of Detroit and graduated from Michigan State University, where she earned her Master of Arts degree in communication, arts and science. Hood-Phillips worked to build a long and successful track record in advertising and marketing at major agencies in the Midwest. Hood-Phillips had been responsible for diversity at Burger King Corp, when Adamson was president there. At Burger King, she broke the glass ceiling and became the highest ranking Black woman in the Burger King Corporation, earning the title of vice-president of human resources. She later was asked to start a new department: Minority Affairs. To some degree, the new department was a response to earlier charges of discrimination made by minority franchisees and suppliers against Burger King in the early 1980s. Hood-Phillips created an innovative program at Burger King that Adamson described as "incredible." Her tough, yet compassionate diversity training program allowed employees to communicate what they were feeling about race and ethnicity in the workplace. Participants signed confidentiality statements to ensure that what was said in the group would not be disclosed to outsiders. In this way, group members felt safe enough to share their deepest fears, and their very real prejudices. The training took place in three-day sessions for groups of 20 to 25 people at a time. Hood-Phillips intended the program to 10 do more than just get people to vent. The program showed people how to overcome the narrowmindedness it exposed, and to build, in Hood- Phillips's words, "productive, collaborative partnerships across lines of difference." When Hood-Phillips followed Adamson to Denny's, she proceeded to give the Company an attitude overhaul. "We had to look at every system especially how you hire, fire, promote and develop people and eliminate anything that would impede inclusion, and build back structures that would foster diversity. It's a huge job," she said. The approach Hood-Phillips used was unusual. Instead of working through a human resources department, as would have been typical for most diversity officials, she operated from a position of authority equal to that of division heads. She used that authority to coax and push diversity initiatives throughout the organization. Other companies had diversity training similar to Denny's, but few achieved widespread participation. The result of her efforts was that Denny's went from diversity laggard to leader. Other companies took notice (Thorne 2002). 5.1 Keeping a Thumb on the Pulse of Diversity One of Hood-Phillip's most important contributions was establishing a set of diversity metrics at Denny's. The Company began to measure systematically its performance on a number of diversity indicators. Each of Denny's 85,000 employees received an hour and a half of diversity training. The managers received nine and a half hours. Trainings ranged from a quick session for line workers that taught the basics of equality and respect for heritage to two-day courses for store managers that included details about diversity in hiring and the basics of antidiscrimination law. More than two million people took Denny's diversity training, according to a Company estimate. The Company claimed to be the largest diversity trainer in the U.S. In addition, performance appraisals for senior managers were based on valuing diversity. For those who refused to attend training, the CEO would withhold up to 25% of their bonuses (Kangas 2006). In 2008, only 10% of African Americans associated Denny's name with discrimination. HoodPhillips remarked: "When we started tracking in 1996, nearly half of all African Americans had a negative image of Denny's, and associated it with discrimination." By 2004, women and minorities came to make up half of Denny's eight-member board of directors, and 45 percent of the 11-member senior management team. Members of minority groups owned 45 percent of Denny's franchised restaurants. In 1998, Fortune magazine ranked Advantica, Denny's parent company, as the second best company for minorities in the nation. In 2001, it climbed to number one. From 2002 to 2007, the Company consistently remained at or near the top of the Fortune Best Company for Minorities list (Faircloth 1998) . Ray HoodPhillips concluded, "Diversity had absolutely been institutionalized at Denny's. Everybody owns this at Denny's." However, by 2012, the Company had fallen off the Fortune list while industry rival Darden Restaurants had made the list. As of 2010, minorities made up 62% of the Denny's total workforce and 41% of overall management. 11 6. Denny's Financial Challenges During the discrimination lawsuits and after, that financial problems proved difficult to overcome. In 1995, Flagstar (Denny's parent company at the time) lost $55 million on revenues of $2.6 billion. Struggling with a poor image and with annual interest payments of $230 million, the Company had lost Wall Street's confidence; the stock price plummeted. Flagstar sold 45 Company-owned restaurants to franchisees, resulting in Denny's revenues dropping from $1.55 billion in 1994 to $1.49 billion in 1995. Adamson tackled the Company's problems on several fronts. To offset competition at Denny's, from fast food restaurants, he lowered prices, introducing five morning meals under $2 to supplement the chain's popular $1.99 Grand Slam breakfast. In addition, Denny's added a "value" lunch menu, with meals from $2.99 to $4.99. In May 1996, Flagstar acquired two family dining chains, Coco's and Carrows, hoping to add more consistent performers to its stable of restaurant chains. Unable to continue under its staggering burden of debt, however, Flagstar spent 1997 reorganizing under Chapter 11 bankruptcy protection. Flagstar finished 1997 with revenues of $2.61 billion, a slight increase over 1996, but reported yet another net loss, this time of $134.5 million. In January 1998, Flagstar emerged from Chapter 11 with a new name, Advantica Restaurant Group, and a debt load $1.1 billion lighter. Adamson remained CEO, but the Company had a new board of directors and newly issued common stock trading over NASDAQ. Not only was Advantica in a more hopeful financial position in mid- 1998, it was receiving recognition for its dramatic turnaround in race relations. With a rejuvenated balance sheet and image, Advantica hoped to complete a solid turnaround. 7. Enter Nelson Marchioli In 2001, Nelson Marchioli, former President of El Pollo Loco restaurants, was asked to replace retiring Jim Adamson as CEO. Marchioli's task was to focus on firm profitability. Marchioli was a strong proponent of diversity, yet he claimed that he had never been able to quantify the financial benefits from the millions of dollars and years of effort invested in it. An effective diversity effort could prevent costly discrimination lawsuits, might help a company understand and reach its market, and could improve a company's image. However, "Diversity can't substitute for basic business execution," Marchioli said (Speizer 2004). Marchioli pointed out that when the discrimination complaints against the Company first surfaced in the early 1990s, Denny's weekly customer count was about 5,500 per store. In 2004, it was 1,000 to 1,200 fewer. "As we were making these incredible strides in diversity, guess who was still having a declining guest count?" Marchioli remarked that Denny's would continue to invest in diversity because "it is the right thing to do," and because it helped the Company understand and serve its diverse national customer base, which made it easier for the Company to attract customers. But Denny's had to do a better job of executing its business strategy in order to succeed. 12 There was conflicting evidence about the link between diversity and company's performance. Diversity was a recognizable source of creativity and innovation that could provide a basis for competitive advantage. On the other hand, diversity was also a cause of misunderstanding, suspicion, and conflict in the workplace that could result in absenteeism, poor quality, low morale, and loss of competitiveness. Therefore, firms faced a tough challenge. If they embraced diversity, they risked workplace conflict, and if they avoided diversity, they risked losing competitiveness and spoiling their reputations with customers and the general public. Diversity Research Network, a group of scholars drawn from six universities, examined four Fortune 500 companies in depth. They found that a variety of contextual variables, including an organization's culture, strategy, and human resource practices, helped to determine whether diversity boosted performance or dragged it down. The results of the study showed that when it came to team output, diversity could cut both ways. Moreover, simply matching a company's workforce to its market was unlikely to increase its odds of success. After analyzing data from a national retail chain, the Network found no evidence that most customers cared whether or not they were served by people of the same gender or race. Employing workers of many different races also appeared to have little effect on average employee turnover in a retail workplace, although employees did quit more often if fewer colleagues were of their same race, according to a study by two professors at the Haas School of Business at the University of California, Berkley. "The most important takeaway is that diversity itself doesn't matter much in terms of turnover for most groups of workers," concluded Leonard, who chaired the Haas Economic Analysis and Policy Group. "It suggests that people are, at least in this sector, pretty tolerant." The Haas findings contradicted an argument of some diversity consultants, who claimed that having a workforce that was both gender and racially diverse reduced turnover. The study also failed to find support for another line of thinking that argued that diverse workplaces experienced more friction and thus required special training (Kelly 2006). From 2006 to 2012, Denny's sales declined from $994 to $488.4 million, and income before taxes tumbled from $44.8 to $35.1 million. Unit sales per Denny's-operated stores were $1.94 million per store. Denny's had recovered from the scandals and lawsuits of the early 1990s and had significantly improved its reputation as a place to eat and a place to work, but it continued to struggle to grow profitably. 8. Denny's Accused of Disability Bias In September 2006, the Equal Employment Opportunity Commission (EEOC) filed a lawsuit accusing Denny's for violation of the Americans with Disabilities Act (ADA). The EEOC claimed that Denny's had failed to provide reasonable accommodation to its workers with disabilities. Specifically, the EEOC alleged that Denny's refused to provide one of its Baltimore restaurant managers with reasonable accommodations for her disability, a leg amputation. The manager desired to return to work after an accident, only to find that Denny's would not allow her to work in the restaurant because of her disability, despite her desire to return to work, and fired her. 13 Moreover, the EEOC alleged that Denny's medical-leave policy violated the ADA, since Denny's policy automatically denied additional medical leave beyond a pre-determined limit - thus denying a possible reasonable accommodation for a disabled employee. Denny's denied all allegations. The EEOC asked the court to bar Denny's from applying its maximum medical leave policy to disabled employees, and on behalf of the Baltimore employee, sought lost wages and benefits, compensatory and punitive damages, and other relief. In what some might consider reminiscent of its original attitudes regarding the racial discrimination charges of the early 1990s, Denny's denied the allegations. In June 2011, Denny's agreed to pay $1.3 million and furnish other relief to settle the EEOC case. In addition to providing compensation to the fired Baltimore manager, Denny's agreed to provide monetary relief to 33 additional workers who claimed they were denied reasonable accommodations and unlawfully terminated. According to the EEOC press release, "...the consent decree settling the suit also requires that corporate-operated Denny's restaurants reinstate certain identified workers, provide additional medical leave to reasonably accommodate disabled employees, provide anti-discrimination training and notice posting, with emphasis on the ADA and disability discrimination; a corporate-level oversight and review process for leave decisions; and reporting to the EEOC (U.S. Equal Opportunity Commission Press Release 2011) . The federal court will retain jurisdiction and EEOC will monitor compliance with the decree." (Eeoc.gov 2012) 9. Healthcare Controversy Denny's faced additional controversy, albeit on a much smaller scale than the discrimination charges, in the fall of 2012. Franchisee John Metz, owner of more than 30 Denny's restaurants, created controversy when he announced that all of his restaurants would be adding a five percent surcharge to customer's bills to cover the costs that he would incur under the Affordable Care Act, or Obamacare as it is popularly known. Metz stated that customers could reduce the amount of tip they would normally give to the server to counter balance the surcharge if they wished. The reaction to Metz's statements were swift and harsh, with Denny's franchisees having to deal with angry customers, declining sales, and calls for boycotts. Denny's chief executive John Miller immediately began damage control, writing, "We recognize his right to speak on issues, but register our disappointment that his comments have been interpreted as the company's position." (Chun 2012) He also expressed his disappointment to Metz about the statements. Metz, for his part, backed down on the threat of the surcharge and released a statement that his previous statements were not representative of the Denny's brand or other franchises. (Chun 2012). Concluding remarks and Discussion The demographics of America were rapidly changing, and managing a diverse workforce had become a critical matter for firms like Denny's. Denny's restaurant chain had transformed itself from a "poster child for discrimination" to a firm recognized for its leadership in workplace 14 diversity. Denny's diversity turnaround served as an example of how fast and how far a company could progress - given enough motivation to do so, an aggressive strategy, and committed leaders. But had the Company really left its discriminatory history behind? Moreover, had Denny's programs to increase diversity over a 15-year period been "worth it" in terms of the Company's business results? Had the payoff from all the efforts and costs of managing diversity been big enough? Annexure Exhibits and Financial Statements: Denny's executives in 2013 and Denny's Menu card are shown in Figure 3 and Figure 4 respectively. Denny's locations for the years 2006-2011 are shown in Table 4. Also, Denny's income statements, balance sheets and statements of cash flow for the years 2007-2012 are

What type of change occurred at Denny's under the leadership of Adamson and Hood? The key actions taken to implement change at Denny's.