Discrimination Charges Against Denny’s Corporation: An Analysis

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Abstract

For more than 5 decades, Denny’s is the most distinguished family restaurant in the U.S.A. Denny’s was a pictogram of discrimination in the past. However, they handled the situation very diplomatically. Denny’s had learned lessons from its past mistakes. The diversity and inclusion policy of Denny’s is integral and essential to the way for doing its business and Denny’s management is focusing the same throughout their organization. This research essay focuses on how faced the discrimination charges in the past, how it handled the same and how it has overcome by perusing ant discriminatory policies and by including social responsibility policies in their management.

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Introduction

At the end of the year 2007, there were about 1546 Denny’s restaurants. Out of this, 394 were operated by the company, and the rest was operated by franchisees. Denny’s restaurants are located not only in America but also operate in Costa Rica, Canada, Mexico, Guam, Puerto Rico, and New Zealand. However, Denny’s lion’s share of restaurants was located in Texas, California, and Florida. Denny’s gross sales were $ 2.5 billion in 2007 and had offered employment to 21,001 individuals in their restaurants.

The Legality, Morality and Social Responsibility of “Denny’s

Discrimination Charges

Analysis of Discrimination in American Business

Even today, discrimination in the form of racial hatred is having an impact on American business. In the analysis of American business, racial issues cannot be ignored. The opportunities for solving the racial issues of the U.S.A especially discrimination against African Americans are depressing in nature. A White landlord initially agreed to let his building to a black business man later refused to let it out on the racial counts. A black traveler was accused as a thief for simply seeking a refund of his bus ticket. These are some of the iotas of racism that exist in America. Denny’s Restaurant, in 1994, paid $54 million to settle race discrimination cases filed by numerous black customers alleging differential services to blacks like asking to pay in advance, not providing a seat to blacks in their restaurants, etc. Though laws have been enacted to outlaw discrimination, yet discriminatory practices exist in the U.S.A.

The critical examination of law, ethics, and social responsibility of Denny’s Discrimination Charges

The Denny’s family restaurant chain (Denny’s Corp) has witnessed copious charges of racial discrimination against black customers. The company owned about 1,500 restaurants across the U.S.A in the year 1990. About 30% of these restaurants were managed by Whites under franchise schemes whereas the remaining 70% were company-owned. From the start of the 1990s, Denny’s allegedly witnessed more than 4.300 complaints by black customers on racial discrimination charges. Further, numerous cases have been filed against Denny’s on mistreatment, denial of service, racial slurs, and various discriminatory practices. Plaintiffs were from different categories like a police officer, a reverend, a student, etc. Denny’s had witnessed a single” sexual harassment “case also. (“U.S Equal Employment Opportunity Commission, 2002”).

One case was filed by a group of African American and Chinese students who were from Syracuse University who alleged that they were refused service and then pushed out of the restaurant by one of the security guards in 1997. They also alleged that they were beaten by the security guards and by a mob of White clients. (Michalle, 2005, p.242).

The majority of political negotiation in the U.S.A operates through a complex system where a part or role is inflicted by the welfare state. Both collective and individual rights can be enforced especially through equal opportunity and affirmative action. A group of African American who had won $ 55 million settlement who alleged that the Denny’s discriminated them. (Kohn 1994). It is to be noted that in a country like Brazil, where African American population exceeds the number of African Americans living in the U.S.A, action like discrimination or equal opportunity action is currently impossible. This is mainly due to Brazilian culture and Brazilian society has not encountered a civil rights uprising. There is a complete disconnection at the heart of public culture in Brazil, for example, the law and other liberal ideas are mixed with favor and other social customs footed on a clienteles and hierarchical society.

For instance, Denny’s settlement with NAACP, which required Denny’s should offer 54 of its future restaurants on the franchise to minorities by 1997. As the result, 47 restaurants were owned and managed by a black company in 1994. (Kleifeld, 1994). In America, due to the existence of discrimination and class action rights, Latinos sued and won against Disney World against its “English Only” policy. Deaf people had won the suit to recognize them as people of autonomous culture and not as handicapped persons. John Gabriel in his comparative study of McDonald’s U.K with that of McDonald’s U.S refers not only the existence of affirmative action legislation in the U.S.A as a basic distinguishing element, accounting for the greater number of minority franchises than in U.K. (Yudice ,2003,p.179).

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In U.S.A, food styles symbolizes racial and class divides. For instance, so as to enhance their image among black customers, the Denny’s restaurant in Los Angeles offers soul food and some other Denny’s restaurant offer food items like green chilies and burritos. This clearly demonstrates Denny’s thirst for profits irrespective of customer’s color. Denny’s restaurant well aware that if they do not reach out or serve the tastes of minorities, they will be loosing great percentage of their business to its competitors. Hence, food industry is under compulsion not to confront the rituals of racism as long as it affects their falling rates of profits and loss of customers.

Denny’s restaurant through settlement agreed to compensate the black plaintiffs against their discriminatory lawsuits by promising greater racial diversity through their purchasing and employment policies and striving to thwart future discrimination in their restaurant operations. (Feagin et al ,2001, p.77)

The various efforts to restrict or exclude blacks to access to family restaurants like Denny’s had stricken a hard blow at U.S.A‘s fundamental values of democracy and equality.

Race relations in America today

An African American is the president of America today. This is really a renaissance in the thinking and visions of Whites in America. It seems that racism has lost its prominence as of today as Whites have the mentality to accept a black as their president. However, no one should deny that racism is deep rooted in the minds of Whites and will rear its head now and then. With the help legislations and social acceptance policy, slowly racism is going to be obscured in the burial ground in the coming decades.

Background Information

Legal Section

Relevant Legal Principles of Equality

Under American constitution, under bill of rights, all are equal before law. U.S constitution guarantees equality under the law to all of its citizens. Equality is footed under the fundamental concept that separate rule by force from rule by law. American Constitution bestows Bill of Rights. Bill of rights grants fundamental rights to the American citizens and offers inalienable rights, which are endowed by the framers of the constitution. Bill of rights offers right to due process and equal protection to all citizens of America irrespective of their color, creed, religion etc.

White employees of Denny’s restaurant had treated African American customers differently or badly from White customers. Whenever, there are too many black customers assembled in Denny’s restaurant, White employees sarcastically use the code word “Blackout.” Senior managers in Denny’s advised their restaurant managers to avoid blackouts by closing the restaurant for a few hours or demanding that black customers should pay for their meals in advance whereas Whites will be allowed to pay after their meals. In Denny’s restaurants, blacks were asked to pay special cover charges which were not applicable to White customers. A group of black college students were refused to be seated in a Denny’s restaurant unless they prepay for their meals or pay cover charges whereas White students need not pay anything in advance. Further, a free birthday meal was refused to blacks even after producing baptismal certificate whereas a White is provided with the free birth day meal. According to U.S constitution, every citizen is to be treated equally and fairly. When blacks are treated discriminately, they feel frustration, pain and embracement. Refusing the unique services that are offered to Whites to blacks in Denny’s restaurants are the clear cases of racial prejudice.

Application of Law to Racial Discrimination

“Title VII of the Civil Rights Act of 1964” as amended proscribes discrimination in employment footed on color, race, sex, religion or nationality. Denny’s management acknowledged that though there was no practice or policy of discrimination at the company, some customers did witness discrimination in some of their restaurants. It is claimed that Denny’s training on non-discrimination and procedures are meant to thwart discrimination against any individuals of any sex, age, race, nationality and not just against African –Americans.

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Legal Conclusion

Ethical Section

Identification of the ethical issues

Ethical behavior is special distinctiveness of human being and it is what differentiate us from other species.It is easy to observe ethics when one’s time is positive and as long as fortune smiles. However, when times are unfavorable, pressure augments and absentmindedness exists, it is difficult to observe ethics.

An act can be defined as having moral or ethical consequences and it is an act which involves decision freely taken that will have negative or positive impact for others. Thus, a managerial ethics consists of the following:

  • Utilitarianism – the greatest good for greatest number
  • Justice and fairness
  • Rights and duties

Presently, Business schools have started to focus on ethical issues as large amount of unethical business practices unraveled recently.

Utilitarian Ethical Analysis

Introduction and brief explanation of Utilitarian Theory

According to John Stuart Mill and Jeremy Bentham, a utilitarianism concept is concerned with moral action or decision which ends in the furthermost good for the maximum number of individuals.

According to Immanuel Kant, individuals have rights, either as citizens, humans or due to occupation of a position and these rights bestows some duties on others and the morality of a given decision or act can be gauged by an analysis of these duties and rights.

According to John Rawls, it is common in U.S. to equate justice with that of legality and there are some occasions where an action that may be legal does not appear just or fair.

Pleasure vs. Pain, Numerical version of Utilitarianism

Under Utilitarianism concept, an action is to be assessed on the quantum of pleasure versus how much pain it going to give us. In another parlance, moral value just relate to the quantum of joy or pleasure and pain. Hence, evaluation of all moral deeds is gauged by the pleasure and pain it offers. Thus, the moral righteousness of a deed is to be gauged by its utility in taking full advantage of pleasures and diminishing the pain.

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Hedonism, governing principle of human conduct

Pleasure and pain in utilitarianism can be measured in numbers. Thus, pleasure in utilitarianism can be measured as hedons which means a unit of pleasure. Likewise, the unit of pain can be measured by dolor. Thus, if one add the hedons and then minus the dolors, the reminder will be the quantum of happiness or sorrow as the case may be.

Utilitarian analysis of Hedonism

Mill deviated from Bentham’s theory that all pleasures were analogues. Mill stresses that some variety of pleasures are inherently superior to others. Mill is said to be a “Qualitative Hedonist” whereas Bentham is said to be a” Quantitative Hedonist. “According to Bentham, a “Qualitative Hedonist” is one who views that the only value dissimilarity between two pleasures is amount. According to Mill, a “Qualitative Hedonist” is one who views that two pleasures are of equal magnitude may vary in regard to value based on their individual qualities.

Moral Conclusion

Ethical issues in business range from a company’s responsibility to be honest with its clients, company’s obligation to conserve the environment, to protect shareholders interests and to safeguard the employee’s rights.

Additional Ethical Analysis

Entrepreneurial Applications

Physician turning to be entrepreneur by constructing and administrating multi-specialty hospitals involve ethical questions. It creates a strong suspicion when physician is the entrepreneur of a hospital and their motivation is under close scrutiny whether their intentions were for profits or for patients. Hence, U.S government has banned through the Medicare Modernization Act of 2003, the construction of new medical facilities by physicians and also barred of availing reimbursement from the Medicaid and Medicare services. (Shactman, 2005). It is to be recalled that physician’s code of ethics could be taken as preventing them from profit-making business.

The Moral Corporation

A business sole aim is to maximize its profits and does not have any social responsibilities. (Milton Friedman). In broader view, a business has additional or other obligations in addition to earning profits. Due to their economic and social power, business must also carry out social responsibilities too. They are expected to make economic decisions alone since they are correlated with the entire social system as business activities have deep implications for society. Due to this, society anticipates business to carryout other responsibilities too.

Good Judgment

Aristotle considered that Plato had given too much significance on reason. He considered that moral character was based in good practices and is derived from practicing habits of pride, liberality, truthfulness and justice. For example, utilitarians considered punishment as a subject of deterrence that is in respect of its outcomes, rather than in respect of merit which puts actions in a theoretical frame of good or bad. For instance, avoiding bad customers in a business is a good ethical judgment. (Haynes,1998 ,p.150).

The VDM Method

A code of ethics in real estate was developed by Verband Deutscher Makler famously known as VDM method. The VDM restricts itself to recounting legal regulations and laws. The association views itself and acts merely as an agent of real estate brokers and does not essentially make particular demands of moral reliability on its members. (Roulac, 1999, p.143).

Moral Conclusion

Thus, moral is concerned about inner guiding principles of each individual. Ethics is concerned about conduct and behavior of society on the whole.

Overall Ethical Conclusion

Social Responsibility Section

Definition of Social Responsibility

Business owners are great mentors for community involvement. Entrepreneurs can employ the very kind of skills for fostering the community that they do for succeeding in a business. Thus, business is having obligations and responsibilities to society at large. For its endurance, every business relies on the continuing support of society. Further, being a good corporate citizen, it makes less trouble with government, taxation authority or else to face law suits as what had happened in Denny’s restaurant case. Further, employees will themselves get value from being part and parcel of business that is obligated to be involved in increasing the social good. A corporate social commitment always helps the long run value of one’s company.

Thus corporate social responsibility is not only good for business but also for community and economy. A business gets a lot of advantages by being committed to social responsibility and involved in social causes and activities. (Abrams, 2003, p.212)

Application of SR Definition to “Denny’s Discrimination Charges”

When Denny’s called back its sensitivity programs, most of their white employees were surprised to understand how some of their behaviors had offended minorities. Denny’s staffs were given intensive training on customer retention and any indecent actions by them may invite class action suits against the company. Training and education made staff’s of Denny’s more aware of their action in their restaurants. In 1997, there was a second bout of discrimination suit against a Denny’s restaurant. It was later found that staff’s at that restaurant had not undergone the mandatory training and education in nondiscriminatory practices. (Peters, 1999, p.135)

SR Conclusion

No doubt, Denny’s had discrimination charges against it. However, they handled the situation very diplomatically by not trouncing behind a mask of “no comment”. Top leadership of Denny’s bore the heat and acknowledged that they indeed had a problem and they were really ashamed of it and actually fixed it. This demonstrates Denny’s management is wanted to be more socially responsible.

Conclusion

Restatement of “Analysis of Law, Ethics and Social

Denny’s was a pictogram of discrimination in the past. Now Denny’s restaurant has transformed its avatar. Now , Denny’s has been identified as most progressively diversified company in the areas like higher number of minority participation both in Board and in top management positions , recruitment of minority and retention , workplace diversity , diversity training and supplier diversity. Since, 1994, Denny’s struggled to retain its minority clients and it has acted as a model of the significance of diversity for advocates of corporate social responsibility. Now, in Denny’s about 48% of the employees are minorities and 36% of its franchises are minorities.

Overall Conclusion, Recommendations, and Predictions

Regaining minority’s confidence is essential for Denny’s to retain its market share in the food industry of America. Denny’s had learned lessons from its past mistakes. Employees are to be trained compulsorily about fair treatment of minorities in the restaurant. Employees should adequately be educated in legal consequences of discriminative policy and its impact on company’s financials and growth. Diversity and inclusion policy of Denny’s are integral and essential to the way for doing its business and Denny’s management is focusing the same throughout their organisation. Denny’s have come long way and are dedicated to prolong their endeavors in being a truly diverse company in period ahead also.

References

Abrams Rhonda, Kleiner Eugene. (2003). The Successful Business Plan: Secrets and strategies. Palo Alto: The Planning Shop.

Feagin, Joe R, Vera Heman & Batur Pinar. (2001).White Racism: The Basics. London: Routledge.

Haynes, Felicity. (1998).The Ethical School: Consequences, Consistency, Care, and Ethics. London: Routledge.

Margaret S, Stockdale, Faye J, &Crosby.(2004).The Psychology and Management of Workplace Diversity. Singapore: Blackwell Publishing.

Michalle E., Mor-Barak. (2005). Managing Diversity: Towards a Globally Inclusive Workplace. North America: Sage Publication.

Peters, Glen. (1999).Waltzing with Raptors: A Practical Roadmap to Protecting Your Company’s Reputation. Hoboken: John Wiley and Sons.

Roulac, Stephen E. (1999). Ethics in Real Estate. London: Springer.

Smith, Ronald D. (2002).Strategic planning for Public Relations. New Jersey: Lawrence Erlbaum Associates

Wilson, Rachel c et al. (2008) When Entrepreneurship and Ethics Collide: The Case of Physician-Owned Specialty Hospitals. Journal of Applied Management and Entrepreneurship.

Yudice, George.(2003). The Expediency of Culture: Uses of Culture in the Global Era. Durham: Duke University Press.

Abrams Rhonda, Kleiner Eugene. (2003). The Successful Business Plan: Secrets and strategies. Palo Alto: The Planning Shop. Web.

Feagin, Joe R, Vera Heman & Batur Pinar. (2001).White Racism: The Basics. London: Routledge. Web.

Haynes, Felicity. (1998).The Ethical School: Consequences, Consistency, Care, and Ethics. London: Routledge. Web.

Margaret S, Stockdale, Faye J, &Crosby.(2004).The Psychology and Management of Workplace Diversity. Singapore: Blackwell Publishing. Web.

Michalle E., Mor-Barak. (2005). Managing Diversity: Towards a Globally Inclusive Workplace. North America: Sage Publication. Web.

Peters, Glen. (1999).Waltzing with Raptors: A Practical Roadmap to Protecting Your Company’s Reputation. Hoboken: John Wiley and Sons. Web.

Roulac, Stephen E. (1999). Ethics in Real Estate. London: Springer. Web.

Smith, Ronald D. (2002).Strategic planning for Public Relations. New Jersey: Lawrence Erlbaum Associates. Web.

Wilson, Rachel c et al. (2008) When Entrepreneurship and Ethics Collide: The Case of Physician-Owned Specialty Hospitals. Journal of Applied Management and Entrepreneurship. Web.

Yudice, George.(2003). The Expediency of Culture: Uses of Culture in the Global Era. Durham: Duke University Press. Web.

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