Hands-On Restauranteur Built Shoney's on Family-Style Food

Hands-On Restaurateur Built Shoney's on Family-Style Food

By STEPHEN MILLER
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more in Business »Raymond L. Danner liked to mount inspections on the fly at Shoney's, the family-style restaurant chain he built into the nation's third-largest. He would drop in unannounced and, if there was a crowd, might take his place behind the griddle as a short-order cook.

During one inspection, it is said, he stood on a table to apologize to patrons for dirty bathrooms and then led the staff on a 24-hour clean-a-thon.


Seigenthaler"Aggressive, assertive, demanding," is the description of his boss's style from Francis Guess, a longtime executive at Danner Co., Mr. Danner's private-equity firm.

Mr. Danner, who died Aug. 30 at age 83 at his home in Nashville, Tenn., built Shoney's Inc. into a 1,600-restaurant outlet. He retired in 1987 to concentrate on his investments, and Shoney's flagged under new management. Mr. Danner's reputation suffered, too, when in 1993 the company settled for $134 million a civil-rights lawsuit alleging that Shoney's had for years discriminated against African-American employees.

Raised in Louisville, Ky., the son of a German-born paper hanger, Mr. Danner began working as a paperboy at age 10 and served in the Army Air Corps during World War II. Starting off with a small grocery store, he owned gas stations, a bowling alley and a drive-in theater in Clarksville, Tenn. In 1959, he acquired his first Shoney's franchise from Alex Schoenbaum, who had founded the drive-in chain. From his initial restaurant in Madison, Tenn., Mr. Danner increased his holdings to six more Shoney's, plus a score of Kentucky Fried Chicken outlets and the Captain D's seafood chain. (Mr. Danner was the captain.)

Obituaries
Notable deaths from the business world and entertainment industry from Tributes.com.In 1971, he joined forces with Mr. Schoenbaum to form Shoney's Big Boy Enterprises Inc. When their franchise agreement turned out to be limited to just 11 Southeastern states, they dropped Big Boy from the menu and concentrated on a family coffee-shop ambiance. By the end of the decade, Shoney's had 300 outlets, most featuring one of the decade's innovations: a salad bar.

The company reported more than 100 consecutive quarters of earnings growth stretching into the late 1980s, making it a Wall Street favorite. "For years, it was one of the easiest companies to analyze," a Wall Street specialist told the New York Times in 1997.

Mr. Danner's first stumble came in 1982, when his handpicked successor resigned in a management dispute. But Shoney's continued to expand, adding Lee's Famous Recipe fried-chicken restaurants to the mix, as well as motels and steakhouses. In 1986, he passed the chief-executive torch to a franchisee, James M. Boyd, but remained active at the company as "a creator, a philosopher for the company," in Mr. Boyd's words.

In 1989, the company was slapped with a class-action lawsuit brought by nine Shoney's employees in Pensacola, Fla. They alleged that Mr. Danner had tried to keep the number of African-American employees to a minimum and that the company had failed to promote African-American executives. In 1993, the company settled. Mr. Danner, by then a newly minted member of the NAACP, put up about $65 million of the total out of his own stockholdings. Subsequently, Shoney's became a model of corporate racial sensitivity, with numerous African-American franchisees and executives.

By the mid-1990s, company finances were deteriorating. Mr. Boyd clashed with the board and left, as did two other short-lived CEOs. Casual-dining upstarts such as Chili's and Applebee's began to eat -- or serve -- Shoney's lunch.

"This is one of those situations where consumers felt they had more-exciting alternatives," says Ron Paul, president of Technomic Inc., a Chicago restaurant- and food-consulting firm.

In 1997, Mr. Schoenbaum complained to the New York Times that the eggs were watered down, and Mr. Danner offered to return as CEO for a $1 salary.

In recent years, Mr. Danner watched with mounting distress as Shoney's, now closely held, declined to about 280 units. "He was brokenhearted over it," said Mr. Guess, the Danner Co. executive vice president. "And the specter of it haunted him for the rest of his life."

But Mr. Danner's legacy lives on in one oft-told tale from glory days: At one Shoney's, he was once so exasperated to find a streaky front window that he smashed it with a broom handle as patrons gawked.

"There must have been 10,000 people in that restaurant," Mr. Guess said with a chuckle. "Because that's how often I've heard that story from eyewitnesses."

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