On May 25, 1994, Denny’s received a crippling verdict. After 4,300 claims were filed against Denny’s for their racism and discrimination towards those of a minority race, specifically African Americans, the company (and its parent company, Advantica) was proved guilty. As a result, Denny’s had to pay $54 million in retributions. This terrible publicity hurt Denny’s image and financial status. But how could the company have gotten itself into this much trouble?

Denny’s has been around since 1958, when the restaurant began in Lakewood, California. In 1961, Denny’s established its brand as a quaint diner feel that served breakfast, lunch, and dinner that never closes, unless it is required by law. Today, there are more than 1,500 across the United States. Denny’s is a convenience restaurant, placed by highway exits in order to attract travelers. This, along with its cheap menu, gives the restaurant a diverse customer base.

Since the early 1990s, the company had been receiving complaints about employees that mistreated minorities such as women and African Americans. The restaurant’s employees would go about this in small ways, with a couple of bigger incidents occurring sporadically.  Often employees would make black customers wait longer than white customers to get a table, or give them a table that was unclean. There were also reports of African Americans being forced by the manager to pay a cover charge before eating, something that was never demanded to white people. All in all, Denny’s had created an uncomfortable environment for many minorities and other customers who were taken aback by the racism.

In some more extreme cases, Denny’s embarrassed and  made minority families feel called out and discriminated against. Rachel Thompson, who turned 13 in 1991, went to Denny’s in order to celebrate her birthday. Denny’s has a promotion that states that people get a free meal on their birthday. Thompson, who brought a baptism certificate proving that it was her birthday, was shocked when the Denny’s employees refused to accept it as valid proof, and made a scene calling her and her family criminals and thieves.

In perhaps the most famous case of Denny’s discrimination, in 1993, a Denny’s in Annapolis refused to serve six black secret service agents working for then-president Bill Clinton. While the six African American secret service agents waited, their white colleagues were sat, had their orders taken, and finished eating by the time the black secret service agents finally got their food. This case was the tipping point for Denny’s. The lawsuit of 1994 was filed, and Denny’s had a big task ahead of them- either redesign the entire company, or crash and burn.

Although the discrimination by Denny’s eomployees was beyond terrible, what really brought this case to light is the way that Denny’s was able to salvage their reputation. A big player in this clean up was a man by the name of James B. Adamson. Adamson is notorious for extensive damage control. Adamson left his job as the CEO of Burger King in order to become the chairman of Denny’s in 1993.

Adamson’s policies completely wiped discrimination out of the minds of Denny’s employees. First, he enforced the policy that employees need to be good to each other and to their customers at all times. He found that most of the restaurant’s employees were often sub-consciously discriminatory, working under the assumptions they had been trained to believe. Denny’s employees abided by the stereotype that women and minorities paid less, and as a result the employees would often take longer to seat them or seat them at a dirty table. Adamson put a stop to this, saying that if any employee was caught doing any type of discriminatory act, they would be fired.

Adamson then worked his way up to the management positions. He had come to find that many managers were not educated to handle the diverse economy that Denny’s encompassed, even if the Denny’s was located in a diverse area. Therefore, he fired many of the incompetent managers, and replaced them with women and/or minorities that were fit for the job. Adamson did the same thing with Denny’s board members, therefore creating a diverse and tolerant environment in all company positions.

5 years after Denny’s crippling lawsuit, the restaurant was named one of the best companies to work for. Adamson said that it was one of his biggest career accomplishments, but that he knew they were not at the end of the line. Actually, he does not believe that fighting discrimination can ever really end. Adamson believes that there must be someone in charge of handling and getting rid of discrimination and every company. He says that if racism ever goes on the back burner, the issues will rise again.

By 2002, When Adamson left the company, Denny’s was a brand new restaurant. Of Denny’s 46,000 employees, about half of them were minorities. 11% of these minorities were black, and another 32% were hispanic. The supervisor positions were held by about 32% African Americans. And, of the 1,500 plus Denny’s across the nation, 450 of them are owned by African Americans.

Denny’s to this day continues to use Public Relations tactics that show a sense of diversity and acceptance. Besides hiring black people to higher positions, they also used black actors in their commercials. The restaurant also brought in racial specialists to teach the employees about appropriateness in the workplace and how to maintain racial equality.

With specialists like James Adamson, and internal and external Public Relations strategies like the ones listed above, Denny’s has turned itself into a company that is looked at as a role model for race relations. In 2001, just seven years after the racial lawsuit, Denny’s was named “Best Company for Minorities” by Forbes magazine. In 2006 and 2007, Denny’s was at the top of Black Enterprise’s “Best 40 Companies for Diversity.”

Denny’s is a true example of a Public Relations success story. Although the company fell on (deservedly) hard times after it’s many cases of racial discrimination, they were able to rebuild themselves into a company worthy of praise for its encompassing ways. The Denny’s case study shows that even when companies fall into tough situations, there is always a way to make a conflict end sunny-side up.