Swift fallout for 'Papa' John Schnatter after admitting use of racial slur

LOUISVILLE, Ky. (WDRB) – Papa John's International Founder John Schnatter resigned as chairman of the company and from his seat on the University of Louisville's governing board Wednesday after admitting he used a racial slur during a business conference call in May.

Schnatter's quick retreat from his prominent positions was prompted by a Forbes story that said Schnatter used the N-word during a discussion about public relations with the company's outside marketing agency.

Schnatter acknowledged the truth of the account on Wednesday and apologized in a statement issued by the company.

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

U of L board of trustees chairman J. David Grissom disclosed Schnatter's resignation from the board in a statement.

"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 NAACP's Louisville chapter and the chairman of the Kentucky Democratic Party had called on Schnatter to resign in the wake of the report.

Just after U of L announced Schnatter's resignation, Jeffersonville, Ind. Mayor Mike Moore removed Schnatter's name from the entrance to the city's Nachand Fieldhouse. Schnatter had recently donated $800,000 for the renovation of the fieldhouse, where he spent time as a kid.

"I could not have that name on this fieldhouse and have kids come in there and get educated," Moore said. "I hate that we’re in this situation that we are in today, but sometimes I have to make tough decisions. Today I had to make a tough one."

U of L spokesman John Karman said it was premature to talk about whether Schnatter's name should be removed from Papa John's Cardinal Stadium, the football stadium he helped finance in the 1990s. 

Schnatter's naming deal for the stadium runs through 2040. Schnatter is also has a free enterprise center named for him in the U of L business school. 

Citing an anonymous source, Forbes reported that Schnatter used the racial language in an apparent attempt to convey his antipathy to racism during a May call with creative agency Laundry Service – the purpose of which was to prevent future public relations snafus like Schnatter’s November comments blaming the NFL’s National Anthem protests for the company’s poor sales growth.

Forbes reported:

On the May call, Schnatter was asked how he would distance himself from racist groups online. He responded by downplaying the significance of his NFL statement. “Colonel Sanders called blacks n-----s,” Schnatter allegedly said, before complaining that Sanders never faced public backlash.

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, the source said.

Schnatter's apology followed an earlier statement by the company that did not challenge the Forbes story's accuracy.

Papa John’s said it “condemns racism and any insensitive language, no matter the situation or setting,” and that the company “will continue to strive to do better” in the areas of “diversity and inclusion.”

The statement also did not address Forbes’ assertion that the company has parted ways with the creative agency, Laundry Service, and Papa John's spokesman Pete Collins did respond to a follow-up request about Laundry Service.

A spokeswoman for Laundry Service, based in New York, said the company has no comment.

Papa John’s executives have touted their recent hiring of the firm as part of their turnaround plans for the brand’s advertising.

Executives have acknowledged a key problem -- that consumers increasingly don't think the "quality" of the company's pizza and its "better ingredients" justifies the price.

“We’ve got a new creative agency with Laundry Service,” Steve Ritchie, who took over as CEO when Schnatter stepped back in December, said on the company’s Feb. 25 earnings call.

Ritchie said Laundry Service would work on fixing the company's "brand perception" challenges.

Schnatter remains the company's largest shareholder, controlling about 30 percent of its outstanding stock.

He stepped down as CEO in December following the NFL snafu but retained his chairmanship of the board until Wednesday's report. 

Papa John's said Olivia Kirtley, the company's lead independent director, will lead the board until a new chairman is named in the coming weeks.

Schnatter was outspoken on U of L board

Schnatter, a longtime donor to U of L and the namesake of Papa John's Cardinal Stadium, has served on the university's governing board since 2016, when Republican Gov. Matt Bevin ushered in a new slate of trustees.

Schnatter was known for his unscripted comments during public board meetings.

In April 2017, Schnatter publicly criticized the management style of then-U of L athletics director Tom Jurich, a powerful figure in the community.

The rift between Schnatter and Jurich led to Schnatter resigning his seat on the U of L Athletics Association, the athletics governing board.

Schnatter has also been a board of member of the U of L Foundation, the nonprofit entity that manages U of L's donations.

He will likely leave that board as well, as he occupies one of foundation board seats reserved for U of L trustees. 

Reach reporter Chris Otts at 502-585-0822, cotts@wdrb.com, on Twitter or on Facebook. Copyright 2018 WDRB News. All rights reserved.

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Chris Otts reports for WDRB.com about business and economic topics, higher education and local / state government. He joined WDRB News in 2013 after seven years with The Courier-Journal. Got a tip? Chris is at 502-585-0822 and cotts@wdrb.com.