From Big Boy franchisee to a $105 million discrimination settlement
In short: Shoney's history is a masterclass in corporate expansion and legal upheaval. What began as a simple drive-in in West Virginia evolved into a massive franchise empire, only to face a landmark civil rights lawsuit that resulted in the largest discrimination settlement of its time.
Founded in 1947 by Alex Schoenbaum, Shoney's began as the Parkette Drive-In in Charleston, West Virginia. By 1952, it became a Big Boy franchisee, eventually rebranding to Shoney's in 1954. The company grew aggressively through subfranchising, expanding across the southeast. Following a 1971 acquisition of the firm by a franchisee, the brand expanded rapidly, increasing its scale by twofold each four-year cycle and ultimately controlling more than a third of Big Boy locations across the country.
The 1980s marked a pivotal shift. In 1976, the company dropped 'Big Boy' from its name to expand beyond restricted territories. After a legal battle with Frisch's over branding, Shoney's paid Marriott $13 million in 1984 to buy out its Big Boy franchise agreement. At that time, Shoney's was the largest Big Boy franchise in the country, operating 392 units.
The brand's legacy was later marred by a 1989 class-action lawsuit alleging systemic racial discrimination. The suit revealed horrific allegations, including instructions to 'lighten the place up' regarding the number of Black employees and orders to 'blacken the o' in the logo on job applications. In 1993, the court awarded a $105 million settlement—the largest of its kind at the time. Founder Ray Danner surrendered $65 million in stock and resigned from the board.
Following a period of decline, the company filed for bankruptcy in 2000. It was acquired by Lone Star Funds in 2002 and later sold in 2007 to David Davoudpour of Royal Capital Corporation. Today, the chain operates in 17 states, having transitioned from a massive 1,800-unit peak in 1998 to a more modern, streamlined presence.
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- Summary by Intellect · source: Shoney's
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