Papa John's founder and former CEO John Schnatter resigned from the University of Louisville Board of Trustees on Wednesday after he admitted to Forbes that he used the N-word and 'hurtful language' during a training session on race in May.
The resignation was effective immediately, said board chairman J. David Grissom in a statement late Wednesday afternoon.
"After speaking with John, I’m confident that his comments, while inappropriate, do not reflect his personal beliefs or values," Grissom said. "No member of the board of trustees condones racism or insensitive language regardless of the setting. The University of Louisville embraces and celebrates diversity and is a supporter of all its students and stakeholders regardless as to their identity. The board appreciates his two years of service and thanks him for his generous support for so many years.”
The incident began with conference call with Papa John's executives and marketing agency Laundry Service that included a role-playing exercise for Schnatter to prevent public relations messes, Forbes reported in a story initially based on an unnamed source. Schnatter was asked how he would distance himself from racist groups online.
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Schnatter responded by downplaying his statement last fall that NFL player protests have hurt his pizza business, according to Forbes.
"Colonel Sanders called blacks n----s," Schnatter said, before claiming the KFC founder never faced public backlash like he has received.
During the same conference call, Schnatter also said other remarks that the marketing agency deemed offensive, Forbes reported. Schnatter said that when he grew up in Indiana, people would drag black people behind trucks until they died, the source told Forbes.
In a statement released to Forbes Wednesday afternoon, Schnatter confirmed the allegations against him.
"News reports attributing the use of inappropriate and hurtful language to me during a media training session regarding race are true," he said. "Regardless of the context, I apologize. Simply stated, racism has no place in our society."
A separate statement by Papa John's, also released to Forbes Wednesday, condemned racism "and any insensitive language, no matter the situation or setting."
Papa John's CEO Steve Ritchie sent an internal email to team members, franchisees and operators Wednesday addressing the event, Bloomberg reported, but the email did not address Schnatter by name.
“You may have read the media reports today tied to our company culture. We want to make it clear to all of you that racism has no place at Papa John’s,” according to the email obtained by Bloomberg.
“The past six months we’ve 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,” Ritchie added. “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.”
Louisville-based Papa John's picked Laundry Service as its advertising agency in October. Laundry Service has since terminated its contract with Papa John's, according to Forbes. Laundry Service has not responded to the report.
Bloomberg obtained a letter Laundry Service owner Casey Wasserman sent his staff May 31. It said the company would end its work with an unnamed client due to “the regrettable recent events that several employees of Laundry Service witnessed during interactions with a client’s executive."
The comments Schnatter made in November about NFL protests led to backlash against the pizza chain. Papa John’s sales were down 3.9 percent across the country from October through December versus the same period from 2016, according to ESPN.
Schnatter, the face of the brand, later apologized for his remarks and stepped down as Papa John’s CEO in December. In February, the NFL dropped Papa John's as its official pizza.
Schnatter had been a longtime supporter of UofL, becoming the naming donor of the football stadium and giving to other areas of the school.
He created two "free enterprise" centers at business schools at Kentucky's two research universities. At UofL, the John H. Schnatter Family Foundation donated about $4.6 million to create the John H. Schnatter Center for Free Enterprise. Another $1.66 million came from the controversial Charles Koch Foundation, which has donated to multiple schools in an attempt to counter what it calls liberal bias in academia.
In 2015, the University of Kentucky accepted $12 million from both foundations to create the John Schnatter Center for Free Enterprise in the Gatton College of Business and Economics.
“Without question, the language reported in the conference call is unacceptable and has no place in our community," said UK spokesman Jay Blanton. "We look forward to Mr. Schnatter further addressing this issue in response to the heavy criticism he is rightly receiving.”