The Cracker Barrel RestaurantsDiscrimination of Gays and Lesbians in the Workplace

Power Point to accompany Opportunities and Challenges of Workplace Diversity by Kathryn A. Cañas and Harris Sondak

Prepared by Melissa Greensides, Kathryn A. Cañas, and Harris Sondak

Case Overview

The Situation Company History Corporate Policy The Boycott Corporate Resolution Corporate Effect National Effect Federal Legislation

The Situation

In Jan. 1991, Cracker Barrel Old Country Store, Inc., a chain of family restaurants, expressly prohibited the employment of lesbians and gays in their workplace.

Managers received a corporate personnel policy memorandum from William Bridges, vice president of human resources, declaring that it was deemed “inconsistent with our concept and values and . . . with those of

our customer base, to continue to employ individuals . . . whose sexual preferences fail to demonstrate normal heterosexual values, which have been the foundation of families in our society.”

Company History

In 1969 Dan Evins founded Cracker Barrel in his hometown of Lebanon, Tennessee.

In 1981 Cracker Barrel Old Country Store, Inc., went public.

By 1986 there were over 47 restaurants with net sales of $81 million.

Company History

By 1991, Cracker Barrel had in operation over 100 restaurant stores along the interstate highways of the Southwest and Midwest.

Customers could expect Cracker Barrel to be homey and spacious with inexpensive country-style meals and a friendly staff.

Cracker Barrel has been recognized for its effective, centralized, but authoritarian leadership.

Corporate Policy

Store managers throughout the chain began interviewing employees to see if any were in violation of the new corporate policy.

Cheryl Summerville had been a cook in Douglasville, Georgia for 3 ½ years; when asked about her sexual orientation she answered truthfully and was fired immediately.

Cheryl Summerville’s official separation notice filled out by the manager expressed the reason for her dismissal:

“This employee is being terminated due to violation of company policy. The employee is gay”

Corporate Policy

Cracker Barrel fired 16 employees in several states. The fired employees did not have any legal recourse

because the gay and lesbian antidiscrimination statues were in effect only in Massachusetts and Wisconsin and about 80 other cities and counties—not where the firings occurred.

Federal civil rights laws do not protect against the discrimination of gays and lesbians in the workplace.

The Boycott

Gay and lesbian activists called for a nationwide boycott at Cracker Barrel restaurants.

The boycott was coordinated by the Atlanta chapter of Queer Nation, where fired employee Cheryl Summerville was a co-chair.

Activists and supporters staged pickets and sit-ins at various Cracker Barrel restaurants at peak lunch hours ordering just coffee.

The Boycott

Activists continued to boycott Cracker Barrel restaurants throughout the summer of 1991.

The boycott grew, as many organizers claimed the company to be racist and sexist.

Restaurant gift shops sold mammy dolls, confederate flags, and other items deemed offensive.

Cracker Barrel’s board of directors was labeled the good ol’ boy network which consisted of middle-aged and older white men. The company only had one female in upper management.

The Resolution

On March 12, 1991, Elizabeth Holtzman and Carol O’Cleiracain, trustees of various large city pension funds, wrote a letter to Dan Evins.

The letter expressed “concern about the potential negative impact on the company’s sales and earnings, which could result from adverse public reaction.” They asked for a “clear statement” of the company’s policy regarding employment and sexual orientation and if any remedy steps had been taken for the fired employees.

The Resolution

Queer Nation responded to Cracker Barrel’s policy by launching a “buy one” campaign.

Activists purchased single shares of Cracker Barrel stock which would allow them to attend the annual stockholders meeting in Lebanon, Tennessee.

In November 1991, Cracker Barrel company officials stopped the new shareholders from taking part in the annual meeting.

In addition, the company used a court injunction to prevent protesters in the corporate complex. Demonstrators were, however, still able to protest on the streets.

Corporation Effect

In November of 1992, Cracker Barrel requested the Securities and Exchange Commission to make a ruling on shareholders intrusion in company’s business.

SEC ruled in accordance to the request. However, one SEC Commissioner dissented: “To claim that the shareholders, as owners of the

corporation, do not have a legitimate interest in management-sanctioned discrimination against employees defies logic.”

Corporation Effect

The firings and the boycott had no obvious negative effects on the corporation’s profitability.

By the end of 1992, sales were up 33 % to $400 million with over 127 restaurants in the corporation.

In 1996, Cracker Barrel’s annual sales had reached over $1 billion.

National Effect

Although Cracker Barrel’s policy did not hurt the profitability of the company, it created social awareness.

The media attention helped to create national awareness of the lack of protection for gays and lesbians on the job.

Boycotts helped lead many counties and municipalities to pass legislation to help prevent discrimination of gays and lesbians in the workplace.

Anti-Discrimination Legislation

By July 30, 1999, the District of Columbia and 11 states presented protection for lesbians and gays in the workplace.

The U.S. states with antidiscrimination statues are California, Connecticut, Hawaii, Massachusetts, Minnesota, Nevada, New Hampshire, New Jersey, Rhode Island, Vermont, and Wisconsin.

In 39 states it is legal to fire workers because of their sexual orientation.

Discussion Questions

1. What were the reasons for Cracker Barrel’s personnel policies? Could they have been well intentioned?

2. What were the advantages and disadvantages to Cracker Barrel of actively banning gay and lesbian employees?

3. How should the values of a customer base affect a company’s personnel policies? What if those values vary by region?

4. What criteria should shareholders use in judging the performance of management?