Papa John's founder resigns after n-word controversy

Papa John's founder John Schnatter. Photo / Getty Images

Papa John's founder John Schnatter resigned as chairman of the company's board late Wednesday, after touching off a firestorm of criticism when he confirmed that he had used a racial slur during a conference call with a marketing agency.

Schnatter, a Donald Trump donor who had already stepped down as his company's chief executive in January after he said that NFL player protests were hurting his pizza sales, apologised after saying that the report that he had used the n-word in the May call, in the business magazine Forbes, was not in error.

"News reports attributing the use of inappropriate and hurtful language to me during a media training session regarding race are true," Schnatter said in a statement. "Regardless of the context, I apologise. Simply stated, racism has no place in our society."

Schnatter's resignation was announced in a brief statement Wednesday night from the national pizza company he had founded more than 30 years ago, but it did little to quell the growing cloud around the company.

Major League Baseball suspended a league-wide promotion it had with the company that allowed fans to get discounts on pizzas after players hit grand slams, while some teams like the Florida Marlins suspended individual partnerships they had with the brand, vowing to shutter stadium concession stands.

A public relations agency hired in February to help Papa John's rebound from the fallout over Schnatter's decision to wade into the uproar over the NFL's player protests last year also cut ties with the brand, CNBC reported.

Schnatter made the racial slur during a call between Papa John's executives and the marketing agency Laundry Service, Forbes reported. T

he group was undergoing a role-playing exercise meant to prepare for public-relations challenges, and Schnatter was asked how he would separate himself from racist groups online. He responded by "downplaying the significance of his NFL statement," Forbes reported.

"Colonel Sanders called blacks n-----s," Schnatter reportedly said.

Papa John's stock plunged to a 12-month low after the report was published, though it rebounded after the news of Schnatter's resignation.

Still the company is deeply intertwined with Schnatter, who founded it shortly after he graduated from Ball State University, opening the first restaurant in 1985, in Jeffersonville, Indiana. Papa John's - PZZA on NASDAQ - went public in 1993 and has grown to a corporate chain with more than 5,100 locations around the world.

But the company has struggled with a drop in sales of late and the recent public relations crises that have revolved around its founder. Schnatter, whose image adorns the company's pizza boxes, still owns a substantial stake in the company, according to CNBC.

Schnatter also resigned from the University of Louisville Board of Trustees after the local branch of the NAACP called on him to be removed.

"The National Association for the Advancement of Colored People a few years ago held a funeral for the n-word," the chapter said in a statement published by reporters online. "Though symbolic that event may have been, it was done hoping to place the word's usage in a place never to be repeated or revived again."

David Grissom, the chairman of the university board, said he had spoken to Schnatter on Wednesday.

"After speaking with John, I'm confident that his comments, while inappropriate, do not reflect his personal beliefs or values," Grissom wrote.

In November, Schnatter drew criticism after a call with investors in which he blamed slow sales at the company, which is an NFL advertiser, on the league's "poor" leadership over the anthem demonstrations.

"This year, the ratings have gone backwards because of the controversy," Schnatter said at the time. "The controversy is polarising the customer, polarising the country."