A year after a much-touted agreement between the corporate owners of Denny's and the NAACP, both sides agree that there has been slow but steady progress toward its goal of creating millions of dollars in business and job opportunities for blacks and other minorities.
Officials of Flagstar Companies Inc. and the National Association for the Advancement of Colored People view the past year as a "start-up" period for the Fair Share Agreement, signed last summer in the wake of discrimination complaints against Denny's restaurants in Annapolis and San Jose, Calif. The seven-year agreement held out the promise of a billion dollars worth of business for minorities by the year 2000.
While progress has been made in several key areas, increasing the number of blacks in the lucrative franchise arena has been troublesome, spokesmen for the groups say. Only one Denny's in the country is owned by an African-American -- a number that has not changed since the July 1993 signing.
But both groups cited the following improvements in Flagstar's minority picture:
* Of 124 new minority hires in management and executive positions, 103 are blacks, according to the company. Of those, 34 are single-store managers. The NAACP says the black management hires represent a 56 percent increase in the past year. Flagstar also named its first black to its board of directors last year, a female college president.
* New contracts with 19 minority suppliers represent $21.3 million worth of business a year -- about 3.5 percent of corporate purchasing, according to Flagstar. The 14 black-owned firms include a crouton maker from Chicago, a paper cup manufacturer from South Carolina and a wax paper producer in Pennsylvania.
* Beginning this fall, the Denny's chain is helping fund a management-training program for unemployed workers at a Seattle community college. Students will work at selected Denny's in the hopes of landing a job after graduation.
Restaurant company leader
The commitments come from one of the nation's largest restaurant companies, a corporation with $2.6 billion in annual sales, 1,500 Denny's restaurants in 48 states, nearly 600 Hardee's, and two steak and charbroiled chicken chains. They come on top of a $45 million settlement the Spartanburg, S.C.-based company reached in May with thousands of Denny's customers who sued, alleging discrimination at its restaurants. And they represent Flagstar's efforts, launched at least two years ago, to improve its "diversity" profile.
"We've made a very sincere effort in a relatively short period of time," said Coleman J. Sullivan, a Flagstar vice president who signed the Fair Share Agreement. "I think the numbers indicate that we are at least moving forward."
Praise despite 'soft spot'
Fred H. Rasheed, the NAACP's economic development director who helped draft the fair share agreement, gave Flagstar its highest marks for increasing minorities in its management ranks, from restaurant managers to corporate vice presidents.
"A tremendous job," he said.
The "soft spot" has been the number of Denny's franchises owned by blacks, he said. The agreement envisioned eight new minority-owned restaurants by the end of 1994. The only black franchisee lost his Los Angeles store earlier this year. But in June, David N. Booker, an African-American and veteran employee, took over a corporate-owned Denny's in Texas.
"The first 12 months constitutes a start-up period for the agreement. I never expected to see dramatic change in 12 months," said Kelly M. Alexander Jr., a North Carolina businessman and member of the NAACP board of directors who monitoring the Flagstar agreement. "What I expected to see was preparation for change and some first steps along that particular pathway. . . . The movement with Flagstar is in the right direction."
Despite Flagstar's progress that is charted in company statistics that cannot be independently verified, the company's efforts
may be lost on the public at large.
Claims of broken promises
In San Jose, Calif., the site of the first discrimination complaint against Denny's, the president of a black businessmen's group said the association was rebuffed in efforts to get work with Flagstar.
"What they are doing is spending money giving it to black consultants. But in terms of Denny's economic commitment to black people . . . that's a fake and a fraud," said Ron McPherson, president of the Santa Clara County Black Chamber of Commerce.
Annapolis Councilman Carl O. Snowden said Flagstar's pledge to find a minority owner for the Denny's where Secret Service agents allegedly were mistreated in 1993 didn't materialize.
"The bottom line is, it was a great public relations campaign but it didn't really produce anything," said Mr. Snowden. "With Denny's, [there's been] absolutely zero outreach in the Annapolis community. It just hasn't happened."
But Mr. Rasheed noted that the publicity surrounding the agreement "created a lot of anticipation and expectation in the minds of people." Flagstar wasn't prepared for the response in some areas, he said. Nor did it accurately predict what it could accomplish in its first year in other areas.
Mr. Rasheed cited as an example the company's goal in minority purchasing: $90 million in the first year. "They had never done as much as $500,000 with minority firms. So how are you going to go from $500,000 to $90 million in a year? It's an unrealistic goal," he said.
Charity donations exceeded
And yet, Flagstar exceeded its $100,000 charitable contributions goal for minorities. More than half of the $250,000 went toward college scholarships, while $68,250 -- or 27.3 percent -- went to the NAACP and other civil rights causes, according to corporate figures.
How well Flagstar lives up to the agreement could well affect the NAACP's reputation.
"I think their [NAACP's] credibility is on the line if they don't deliver," said Harvey Gantt, the former mayor of Charlotte.
The Flagstar fair share agreement is one of about 60 the NAACP has negotiated with corporate America since 1982. NAACP staff and volunteer members from the state in which a company is located monitor an agreement.
"You can't have people who have a self-interest or could benefit negotiating or participating directly in monitoring these agreements," said Mr. Rasheed. "That would undermine the credibility of what we're doing."
When the Flagstar agreement was signed in July 1993, the company's intentions came into question. The company had been battered by negative publicity over Denny's treatment of black customers, including the Secret Service agents who visited its Annapolis restaurant.
At the time, Jerome J. Richardson, Flagstar's imposing and intense chief executive, also was trying to win a coveted National Football League franchise.
On the day Mr. Richardson announced the fair-share agreement, his football group signed a similar deal with the NAACP, promising minority participation in a new $160 million stadium for the Carolina Panthers.
Of the more than $60 million in stadium contracts awarded so far, 20 percent has gone to black-owned firms, said Carol Lilly, the Panthers' minority affairs consultant.
But some black leaders in Charlotte question the level of minority participation in the stadium project because the NAACP
assesses the Panthers' progress in private meetings with the team.
Few black-owned outlets
In the Flagstar deal, the greatest challenge has been in increasing the number of franchises owned by African-Americans.
A Denny's franchise could cost anywhere from $600,000 to $1 million, depending on whether the restaurant already exists or must be built from the ground up.
When the only black-owned Denny's folded in the spring, Flagstar reopened the south Los Angeles restaurant within days, saving 39 jobs.
In selling a company-owned Denny's in Beaumont, Texas to David Booker, Flagstar enabled a regional operations manager to realize his ambition to own a restaurant. A year ago, Mr. Booker, 34, approached his supervisor about owning a Denny's. He was told to wait "a little bit and we'll give you an opportunity to franchise a Denny's."
"And that's what happened," said Mr. Booker, who now owns the Denny's where he first worked as a busboy 16 years ago.
By year's end, company officials said they expect to conclude Denny's franchise agreements that would result in seven new black owners, operating 32 restaurants.
Flagstar officials wouldn't comment on any financing they may provide to them. But Mr. Coleman, a company vice president, said, "We can be creative in the way they [the restaurants] are [made] available to franchisees that doesn't require a lot [of money] up front."
Purchasing is key area
The franchise agreements haven't been concluded sooner because several major business developments within the corporation prevented Flagstar from doing so under franchise law, said Thomas A. Lounds, Jr., Flagstar's director of public affairs.
In assessing a corporation's commitment to blacks and other minorities, Mr. Rasheed said, purchasing is another important area "because this is an area that will help us to get into the economic mainstream of the country."
Under the Flagstar agreement, the NAACP and other minority organizations would help recruit new hires and suppliers for the corporation. And while some African-American-owned firms have been referred for work by the civil rights group, other blacks who won contracts in the last year did so through their own efforts and persistence.
Kent Matlock, for example, a public relations executive from Atlanta, was hired prior to the signing of the NAACP agreement. Mr. Matlock, along with an African American-owned advertising firm in Chicago and a black South Carolina newspaper publisher, helped Flagstar spend $1.5 million in advertising and marketing with minority media outlets, the company said.
Media complaint
Robert W. Bogle, publisher of the Philadelphia Tribune and president of a national black newspapers association, said Flagstar reneged on a June 1993 commitment to spend $1 million with his group, the National Newspaper Publishers Association. Mr. Bogle said he believes the commitment was a hollow promise intended to ward off criticism from the publishers' group as discrimination complaints against Denny's mounted.
Mr. Sullivan, Flagstar's vice president for communications, defended the company's progress in this area: "We've made a very significant commitment to black-owned media and we'll continue to do so. . . . We think we're on the right track. Anytime you deal with a large company, things can't happen overnight."