Last year, Papa John’s faced backlash when Schnatter blamed the NFL and players’ national anthem protests for the chain’s subpar sales. In May, executives at the pizza chain and marketing agency Laundry Service held a conference call in an attempt to prevent further controversies for the brand, Forbes reported early Wednesday morning.
“On the May call, Schnatter was asked how he would distance himself from racist groups online,” a source told Forbes. “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 reportedly discussed his early life in Indiana, where a source told Forbes he said “people used to drag African-Americans from trucks until they died.”
In a statement to Business Insider, Schnatter admitted that he had made the comments reported by Forbes.
“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.”
According to Forbes, Schnatter meant his comments to show his opposition to racism. Instead, a number of people on the call reportedly found the comments to be offensive. After hearing of the incident, Laundry Service owner Casey Wasserman moved to terminate the agency’s contract with Papa John’s, Forbes reports.
“Papa John’s condemns racism and any insensitive language, no matter the situation or setting,” Papa John’s said in a statement.
The statement continued: “Our company was built on a foundation of mutual respect and acceptance. … We take great pride in the diversity of the Papa John’s family, though diversity and inclusion is an area where we will continue to strive to do better.”
Papa John’s shares plunged on Wednesday following Forbes’ report, falling by up to 5.9%.
Papa John’s announced in late December that Schnatter would be stepping down as CEO and would be replaced by Steve Ritchie. However, Schnatter remained the chairman of the company’s board.
In March, Papa John’s announced it had ended its sponsorship deal with the NFL after months of controversies and slumping sales. The next day, Pizza Hut announced that it was the new official pizza of the NFL.
Schnatter has a history of making political statements that have sparked controversy.
He came under fire in 2012 for saying the Affordable Care Act, the healthcare law better known as Obamacare, would be a “lose-lose” for Papa John’s franchisees and employees. He has spoken out extensively against what he says is overregulation by the government.
Schnatter also donated $1,000 to President Donald Trump’s campaign, though he did not publicly express support for him.
“As far as the politics, I have no idea,” Schnatter told Business Insider before Trump’s inauguration. “I do think we ought to give the new administration at least a chance to either do better things or to botch it.”