In today's business landscape where corporate social responsibility carries increasing weight, diversity, equity and inclusion (DEI) have become crucial metrics for evaluating corporate values. For restaurant giant Denny's, DEI isn't just a slogan—it's a deeply ingrained business philosophy. The company's supplier diversity program serves as the cornerstone of its DEI strategy, addressing not only commercial fairness but also social responsibility and economic development.
The Far-Reaching Impact of Supplier Diversity
Leonard Greenhalgh, Professor Emeritus of Management at Dartmouth's Tuck School of Business, explains that supplier diversity professionals create opportunities for businesses from diverse backgrounds to succeed. These successful enterprises then stimulate local economies by generating wealth, serving as positive role models, providing career development opportunities, and inspiring hope.
Diverse suppliers often attract and nurture exceptional employees while building strong reputations within their industries, leading to expanded business opportunities. During the COVID-19 pandemic particularly, supplier diversity emerged as a vital lifeline for struggling small businesses. Some major banks even integrated their D&I leaders into supplier diversity teams to bring broader perspectives to supply chain evaluations.
Denny's Diversity Journey
Denny's President and CEO John Miller demonstrated the company's commitment to supplier diversity by joining the CEO Action for Diversity & Inclusion coalition in 2017. Despite pandemic-related challenges including furloughs, layoffs and restaurant closures, Denny's announced plans in July 2020 to hire 10,000 restaurant workers as same-store sales improved. More importantly, the company's supplier diversity program maintained strong momentum.
Michelle Hunt, Director of Supplier Diversity at Denny's, emphasized that while the restaurant industry suffered significant pandemic impacts, Denny's didn't lose any diverse suppliers. The company actively assessed emerging needs and opportunities while conducting "health checks" to ensure supplier stability.
From Civil Rights to Economic Rights
Greenhalgh traces minority business supply chain initiatives to the civil rights movement, which evolved into an economic rights movement. In 1969, President Nixon established what is now the Minority Business Development Agency through executive order. This Commerce Department agency helped create the National Minority Supplier Development Council (NMSDC) in the private sector. Census Bureau data shows minority-owned businesses represent nearly 30% of U.S. firms, employing 7.2 million Americans with annual revenues exceeding $1 trillion.
The Core Pillar of DEI Strategy
Hunt stresses that supplier diversity forms a key pillar of Denny's broader DEI commitment—a commitment born from a pivotal moment in company history. In 1994, Denny's reached a $54.4 million settlement with the Justice Department following a class-action lawsuit where over 1,000 Black customers alleged discriminatory service denials and corporate culture at locations nationwide.
Hunt acknowledges the early 1990s lawsuit as a "shameful moment" in Denny's history that became a "wake-up call." Since then, the company has worked to not only address DEI issues but actively embed these values throughout operations and business strategy.
The Continuous Path of Progress
Hunt notes Denny's has undergone corporate transformation and takes pride in cultural and operational progress over 25 years, but recognizes this work remains ongoing. "There's always room for more improvement," she says.
Since launching its supplier diversity program in 1993, Denny's has paid over $2 billion to diverse and disadvantaged suppliers. Eligibility requires U.S.-based for-profit businesses that are independently operated and at least 51% owned by American citizens from specified groups including women, veterans, LGBTQ+ individuals, people with disabilities, or racial/ethnic minorities. Suppliers must provide certification from organizations like NMSDC and adhere to Denny's Supplier Code of Conduct.
In 2019, diverse and disadvantaged businesses accounted for 14% of Denny's procurement, with most being tier-one direct suppliers. Greenhalgh notes that in industries with fewer diverse suppliers, companies may need to rely on tier-two suppliers while maintaining deeper supply chain diversity.
Hunt reports Denny's spending with diverse suppliers has remained at 10% or higher for over a decade. "Once you become a Denny's diverse supplier, our goal is to maintain and expand your role within our organization," she explains. The company continues identifying new diverse suppliers while seeking additional opportunities for expansion.