Based on Fannie Hurst's novel, a white woman gets rich with her black housekeeper's pancake recipe; they are friends but have conflicts with their daughters.
Widow Bea Pullman (Claudette Colbert) prepares her girl Jessie for day nursery. Black Delilah Johnson (Louise Beavers) asks Bea for a job as housekeeper if her daughter Peola can live there. Delilah says Bea needs loving and shares her secret recipe for pancakes. Bea was selling maple syrup but rents a place for pancakes and gets a painter and furniture man (Alan Hale) without a down payment. In five years the business is a success. Peola cries because Jessie called her black. At school Peola hides from her mother, because she was passing for white. Bea gives pancakes to broke Elmer Smith (Ned Sparks), who advises her to box the flour. Bea and Elmer tell Delilah they made $15,000, but Delilah still wants to live with Bea.
At the tenth anniversary party Peola Johnson (Fredi Washington) tells Delilah that she wants to be white, and Bea meets ichthyologist Stephen Archer (Warren William), who stays after and kisses her. Delilah asks Bea about Stephen. Bea suggests that Delilah send Peola to college, but she does not want to go to a Negro college. Elmer complains that Stephen ruined a businesswoman. Stephen asks Bea to marry and go to sea, and she asks him to keep it a secret from Jessie. Stephen meets Jessie Pullman (Rochelle Hudson), who tells Bea she needs new clothes. Stephen invites Jessie to his aquarium. Delilah tells Bea that Peola left school, and Bea goes with her to help. They find Peola working as a cashier; but Peola pretends she does not know Delilah, and Bea reprimands her.
At home Peola apologizes to her mother but says she wants to go away. Delilah cries and says she can't give up her child. Jessie tells Bea she has been seeing Stephen and doesn't want to go back to school. Jessie goes to Stephen and says she loves him though he calls her a baby. Delilah takes sick and asks Bea for a good funeral. Bea overhears Stephen telling Jessie he is engaged. Jessie tells Bea she is going back to school. Elmer comes in and says Bea can sell her management, but Bea says she changed her mind. Stephen comes in, and Elmer leaves; but Bea learns that Delilah is dying, crying "Peola." At her funeral in a black church Peola cries and asks forgiveness of her mother. Stephen asks Bea to marry right away; but Bea says that Jessie is in love with Stephen, and so she can't marry even though she loves him. Stephen agrees to wait. Jessie tells Bea that Peola is going back to school.
This is one of the rare films of this era to face racism; in this case it leads a light woman to try to pass for white by avoiding her black mother. The white mother also sacrifices her immediate happiness so as not to hurt her daughter's feelings.