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Papa John's Starts Pulling Founder's Image From Marketing

John Schnatter had apologized and said he would resign as chairman after Forbes reported that he used the N-word during a media training session

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    Papa John's Starts Pulling Founder's Image From Marketing
    Kathy Kmonicek/Invision/AP, File
    This Sept. 14, 2012, file photo shows John Schnatter, founder and then chairman and CEO of Papa John's International, Inc., with a display of pizzas to celebrate the grand opening of Papa John's 4000th restaurant in New Hyde Park, New York.

    Papa John's, which has featured founder John Schnatter as a spokesman in logos and TV ads, has begun pulling his image from its marketing and pledged to assess its diversity practices in response to his use of a racial slur. 

    Schnatter's face was off some materials by Friday, though the pizza chain said there are no plans to change its name. Schnatter is still on the board and is the company's largest shareholder — meaning he remains a key presence.

    CEO Steve Ritchie said Friday the company will retain an outside expert to audit its processes related to diversity and inclusion. And he said senior managers will hold "listening sessions" to give employees a platform for any concerns.

    "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 said in a statement.

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    Schnatter came under fire this week after a Forbes report that he used the N-word during a media training conference call in May. When asked how he would distance himself from racist groups, Schnatter reportedly complained that Colonel Sanders never faced a backlash for using the word.

    Schnatter subsequently said he would resign as chairman and issued a statement of apology acknowledging the use of "inappropriate and hurtful" language.

    In a radio interview with WHAS in Louisville on Friday, Schnatter said he was "just talking the way that the Colonel talked." He said the comment was taken out of context but that he nevertheless felt "sick" about the incident.

    "I said it, and it's wrong," he said.

    In addition to appearing in TV ads in the past, Schnatter's image has been on packaging and in a logo that usually is all over the website of the Louisville, Kentucky-based company.

    Papa John's has acknowledged in regulatory filings that Schnatter's role as its pitchman could be a liability if his reputation was damaged. The company got a taste of that last year, when Schnatter stepped down as CEO after blaming disappointing pizza sales on the outcry surrounding football players kneeling during the national anthem.

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    Keith Hollingsworth, a professor with Morehouse College's business department, said keeping Schnatter in the marketing and advertising would signal to people that the company does not have a problem with his comments, or that it doesn't think they are a big deal.

    "Five years from now, they might be able to start bringing him back. But at the moment, you have to be very decisive and show you take this very seriously," Hollingsworth said.

    The company cannot afford to alienate customers, with sales already under pressure from rivals such as Domino's. For the first three months of this year, Papa John's said a key sales figure fell 5.3 percent in North America.

    Schnatter owns nearly 30 percent of the company's shares, which fell after the report but rebounded when he said he would depart as chairman. They ended little changed Friday.

    Other fallout continued Friday. The University of Louisville said it will remove the Papa John's name from its football stadium, and that it will rename the John H. Schnatter Center for Free Enterprise at its business college. Earlier in the week, the school said Schnatter resigned from its board of trustees.

    Major League Baseball had also said it was indefinitely suspending a promotion with Papa John's that offered people discounts at the pizza chain after a player hit a grand slam.

    Papa John's International Inc., which began operations in 1984, has more than 5,200 locations globally.