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Papa John's Founder Quits As Chairman After Using The N-Word During Conference Call

The founder of the Papa John's pizza chain has stepped down as chairman of the board after he apologized for using a racial slur against African-Americans during a conference call in May.

John Schnatter's resignation comes months after he had already quit as CEO in the wake of controversial remarks concerning the National Football League's handling of anthem protests.

An article published Wednesday in Forbes detailed the latest incident from May involving a conference call between Papa John's executives and the marketing agency Laundry Service. In the call, Schnatter sought to downplay his earlier remarks about the NFL's protests, led by African-American players, allegedly saying that "Colonel Sanders called blacks n******," and never faced a public rebuke.

According to Forbes, "Schnatter also reflected on his early life in Indiana, where, he said, people used to drag African-Americans from trucks until they died. He apparently intended for the remarks to convey his antipathy to racism, but multiple individuals on the call found them to be offensive, a source familiar with the matter said. After learning about the incident, Laundry Service owner Casey Wasserman moved to terminate the company's contract with Papa John's."

Following the Forbes article, Schnatter on Wednesday released a statement acknowledging "the use of inappropriate and hurtful language."

"Regardless of the context, I apologize," he said, according to CNBC. "Simply stated, racism has no place in our society."

In its own statement released late Wednesday, Papa John's said the board had accepted Schnatter's resignation and would appoint a new chairman "in the coming weeks."

Papa John's shares fell nearly 5 percent on the news Wednesday, dipping from a high of $51.04 shortly after the opening bell to $48.42 per share by the close.

In a memo obtained by CNBC that was sent to team members, franchisees and operators, CEO Steve Richie, who replaced Schnatter in January, acknowledged that over the past six months the company "had to take a hard look in the mirror and acknowledge that we've lost a bit of focus on the core values that this brand was built on and that delivered success for so many years."

"We've got to own up and take the hit for our missteps and refocus on the constant pursuit of better that is the DNA of our brand," Ritchie said.

Following a call to shareholders in November, Schnatter came under fire for remarks about the NFL. He said Papa John's – an NFL sponsor and advertiser had been "hurt" by the "take a knee" protest meant to draw attention to police brutality.

"And more importantly, by not resolving the current debacle to the player and owners' satisfaction, NFL leadership has hurt Papa John's shareholders," Schnatter had said during the Nov. 1 call.

The comments sparked a backlash on social media, with some accusing the company of racism.

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