Leighton Hull Title: President & CEO, Golden West Foods Corp. Education: B.S., Indiana University; graduate work at School of Finance and Harvard School of Business Most Admired Person: Besides family, Bill Cosby Career-turning Point: “Since I was 8 years old, I’ve wanted to own my own business.” Leighton hull discusses denny’s and diversity Denny’s and its parent company, Advantica Restaurant Group Inc., are happy today with what they call their Diversity Initiatives. The company that operates two massive restaurant chains besides Denny’s (Coco’s and Carrows) was recently ranked No. 1 on Fortune magazine’s list of America’s 50 Best Companies for Minorities for the third year in a row. Today, 39 percent of Denny’s 354 stores are owned by members of minority groups. Twenty-three ownership groups controlled by blacks own 66 Denny’s restaurants. That wasn’t always the case. In 1993, six black U.S. Secret Service agents successfully sued what was then called Flagstar Companies Inc. because of discrimination they had experienced at a Denny’s restaurant in Annapolis, Md. The court case opened the door to hundreds of complaints of racism in the restaurants and scores of lawsuits that led to the chain being referred to by many as a “posterchild for racism.” It also led to great changes in the company. Among them was a fair share agreement with the NAACP that established specific numerical targets regarding franchising, purchasing, employment and board participation. Fred Rasheed, who was head of the NAACP’s economic development division and negotiated the agreement, called an old friend, Leighton Hull, in 1995. Hull, owner of two McDonald’s franchises in Lynwood, was unhappy with McDonald’s anyway and believed he saw an opportunity with Denny’s. (At the time, there was one black franchise owner in the system.) Today, Hull, as owner of Golden West Foods Corp. with $20 million in annual revenues, owns 14 Denny’s restaurants with nine more in development in California, Hawaii and Indiana. Operating from a flagship restaurant on Sepulveda Boulevard in Sherman Oaks, Golden West is the largest black-owned franchise operator in the Denny’s system. Hull spoke with Business Journal editor Michael Hart about why he decided to do business with Denny’s and about what it takes for an entrepreneur to work successfully in a sometimes rigid franchise system. Question: Given the environment and negative publicity surrounding Denny’s in the early 1990s, why did it seem like an attractive franchise for you to invest in? Answer: When I met with Jim Adamson, the chairman of the (Advantica) board, and looked into his background, I determined he seemed to be a fair guy and a smart guy, number one. Smart guys realize that, in order to get on top and stay on top, they have to use all the talent and resources they can muster and get their hands on. I knew his smartness transcended racism and he would go to work to turn this company around. He did turn it around. It was my belief that these guys were ready to clean up their act and I turned out to be right. And I did what I could along the way to help them, so it turned out to be a good marriage. Q: Besides your personal interaction with the chairman of the board, what led you to believe Denny’s was not a “posterchild for racism”? A: I never believed it was the whole company, and it wasn’t. It was a few characters out there that were misbehaving. When I went down there to (corporate headquarters in) South Carolina and talked to people, they seemed like decent folks. I didn’t have the sense they condoned the actions of the people who were misbehaving in some of the stores. Q: Have you experienced racism during your time as a Denny’s franchiser? A: No. I made it clear I wanted my stores to be in markets where there would be opportunities. I wasn’t going to be pigeonholed in any particular kind of environment. In the old days, sometimes franchisers would earmark minority franchisees for minority areas. I made it clear that wherever the good markets were was where I wanted to operate. So I have stores in Kona, Hawaii as well as Watts as well as Sherman Oaks. I’m not locked in only in Watts. Q: How and why did you become a franchise operator in the first place? A: Franchising was not something I was interested in as a young person. I wanted to create my own franchise, a hamburger chain or my own car-fix-it place, whatever. But as you get older and the meter runs, you see that maybe reinventing the wheel is not the way to go. I was a management consultant at one time. I organized deals for people, assisted with site analysis and developed loan packages. A fellow came to me wanting to open a franchise business for a firm he had worked 15 years for. I took his case and was able to successfully get him the funding. That franchiser (Goodyear Tires) was so impressed with the package that they offered me a franchise. After this company offered me one, I thought, why not put in applications at others just to see what would happen? I contacted all the other major franchises and I received a favorable nod from most. I put my application into McDonald’s last because I’d heard they were hard to get into; it turned out not to be the case. Q: What happened with McDonald’s? A: I operated two McDonald’s stores for over 10 years. Then in the early 1990s, McDonald’s was really building a lot of stores. When you have a lot of stores, it can affect sales of existing stores. So, I thought it was time to seek some other opportunities where stores might be more spread out, where the impact was less. Q: The diversity issues aside, why Denny’s? A: Looking at the quick-service market, I saw a proliferation in the arena: the McDonalds and the Burger Kings and the Carl’s Jr.’s and the Wendys and the Taco Bells. The list is endless. Family dining, on the other hand, was not nearly as saturated. Given households have two working people and children, families would be seeking an outside source for a wholesome family meal. Thus family dining, I thought, would come into its own. So I called the biggest, which is Denny’s, the largest family dining company in the country. Q: How can an entrepreneur operate successfully, and happily, in a franchise world? A: Franchising is a way to be in business for yourself but not by yourself. (Denny’s) products are great products and they’ve got a great system, but to implement those good products and execute their good system requires effort and talent. My job is to seek out and develop and motivate talent. You can figure out how to cook an egg or a good hamburger and do it in a reasonable amount of time, but you need people who can execute a good plan. That’s really the challenge. The talent required to execute is a job done every single day and that’s the tough challenge I enjoy. In a restaurant environment, each customer is concerned with the service they receive. Not the good job you did yesterday or the hot food you served this morning, but they’re concerned about their bacon, their steak, their cup of coffee. The challenge for us is to deliver that great experience every time. Q: How has the restaurant business changed over the years you’ve been in it? A: It’s becoming more automated. The quality of food products has improved dramatically. The ability of suppliers to get large quantities of food to the back door has improved. The quality of kitchen equipment has improved. Customers expect higher quality than they did in the past. There are more restaurant players. Competition is heavier and it requires all of us to move closer and closer to excellence. It requires us to provide the best food at the best price in a cleaner environment. Customers expect a good steak whether it’s $50 at a fancy restaurant or $7 or $8 at Denny’s. I don’t think that was the case before. Q: What is your greatest challenge as a franchise operator? A: Developing people who care and are astute enough to understand the people they’re working with and understand what customers want and then being able to fill those needs. Not to mention operational needs like equipment and food and service. Q: What does it take to be a restaurant manager? A: The real pros are far and few between. There is a real competition for talent these days. A good restaurant manager is sought out by lots of people. It takes a certain mentality to effectively manage people.