Papa John's founder John Schnatter, who was replaced as CEO in January but remains chairman, confirmed details of a Forbes report that he had used the "n" word during a conference call in May.
In a statement to Ad Age provided by Papa John's, Schnatter said: "News reports attributing the use of inappropriate and hurtful language to me during a media training session regarding race are true. Regardless of the context, I apologize. Simply stated, racism has no place in our society."
Papa John's and Laundry Service are no longer working together, and according to Forbes, the breakup has to do with the pizza chain founder using the n-word on a conference call.
The Forbes report, citing an unamed source with knowledge of the incident, had said that the slur was used during a call with then-agency Laundry Service in May.
Schnatter, of course, had made headlines—not the kind he likes—in November of last year, when during the company's quarterly conference call he suggested that the NFL's handling of the fallout from players kneeling in protest during the national anthem had dragged down sales. At the time, Papa John's was the official pizza of the NFL, a relationship that dissolved in February.
On the May call with Laundry Service, Forbes reports, Schnatter allegedly responded to a question about how he could distance himself from racist groups online "by downplaying the significance of his NFL statement."
"Colonel Sanders called blacks n-----s,'" Schnatter allegedly said, complaining "that Sanders never faced public backlash."
That comment and others disturbed multiple people on the call, Forbes' source said, according to the report. After he learned about the matter, the chairman and CEO of Laundry Service parent company Wasserman, Casey Wasserman, moved to end Laundry Service's contract with the pizza chain, Forbes said.
Also in May, although the timing is unclear, Papa John's then-CMO Brandon Rhoten, who picked Laundry Service as the chain's creative agency of record (replacing Grey) and had been with the company roughly a year, was pushed out.
Wasserman and Laundry Service declined to comment to Ad Age on the matter.
Schnatter, who opened the company's first restaurant in 1985, has long been the face of his chain, appearing in many of its ads and on its pizza boxes. He was noticeably missing from the brand's first spots from Laundry Service, which began running in April.
By 4:30 p.m. Wednesday, shares of Papa John's had fallen 4.8 percent to $48.33. A year ago, the shares were trading above $75. As of March, Schnatter held more than 9.45 million shares of Papa John's, or roughly 29.4 percent of its outstanding shares.
Laundry Service parent Wasserman confirmed earlier this week that the agency had laid off 10 percent of its staff and that founder Jason Stein and his wife, chief creative Alyson Warshaw, had departed the company. The two plan to launch a new business.