Schnatter, 56, uttered the racial slur during a call between Papa John’s executives and the marketing agency Laundry Service, Forbes reported Wednesday. The group was undergoing a role-playing exercise meant to prepare for public relations challenges.
During his first full-length interview Friday, Schnatter, who still has a substantial ownership stake in the company and sits on its board, told WHAS in Louisville that his comments were taken out of context but he still expressed contrition for hurting people.
“I can’t talk like that even if it’s confidential and it’s behind closed doors,” he said. “I did it. And I own it. And I’m sorry. And I’m sick about it, frankly.”
He resigned as chairman of the company’s board late Wednesday and also stepped down from the University of Louisville’s Board of Trustees after the local branch of the NAACP called for his removal.
After news that he had used the n-word went viral, Papa John’s stock plunged to a 12-month low. The subsequent update, confirming his resignation, however, caused prices to surge 12 percent over the following days. Rebound notwithstanding, Schnatter’s stepping down did little to quell the growing cloud around the company.
In his statement Friday, Ritchie said that, “Papa John’s is not an individual. Papa John’s is a pizza company with 120,000 corporate and franchise team members around the world.” He promised an external audit of company policies, training for senior management, and an open-door policy encouraging employee feedback.
The company could suffer a bit because Schnatter is inextricably intertwined with Papa John’s, said Jeffrey Sonnenfeld, Senior Associate Dean for Leadership Studies at Yale School of Management.
He pointed to Martha Stewart as a case where the association didn’t hurt her product because “her base cared more about the square inch of her fabric.” But Schnatter may have alienated his customers.
“He may just want to sever all ties,” — including divesting his ownership interest — “simply because people won’t want to enrich him,” Sonnenfeld said.
Schnatter, a Trump donor, had already stepped down as his company’s chief executive in January after he faced fallout for blaming staggering pizza sales on the National Football League protests.
“The ratings have gone backward because of the controversy,” Schnatter had said at the time. Papa John’s was an NFL advertiser and President Trump had attacked the NFL and its players who knelt in protest over racial injustice and police brutality. “The controversy is polarizing the customer, polarizing the country.”
Schnatter founded the company shortly after he graduated from Ball State University, opening the first restaurant in 1985, in Jeffersonville, Ind. Papa John’s — PZZA on Nasdaq — went public in 1993 and has grown into a corporate chain with more than 5,100 locations around the world.
The brand is deeply intertwined with its founder’s image — which adorns the company’s pizza boxes — presenting challenges for corporate management to distance itself from him.
“I don’t condone racism. I don’t condone prejudice,” Schnatter said, adding that he would like to issue an apology to the university’s football players of color, “if they would let me.”