The founder and face of Papa John's pizza resigned as the company's chairman after apologising for using the N-word during a conference call in May.
Papa John's said it would appoint a new chairman to replace John Schnatter "in the coming weeks".
Schnatter had apologised after Forbes reported that he used the racial slur while participating in a role-play exercise.
He found himself in hot water last year when he said that Papa John's pizza sales were hurt by NFL players kneeling during the National Anthem in protest of racial injustice. These comments caused him to step down as CEO earlier this year.
Papa John's, which was founded by Schnatter in 1984, is the third largest pizza chain in the United States behind Domino's and Pizza Hut. Forbes also reported that Schnatter recalled growing up in Indiana, where he said people used to drag black people from their trucks until they died. Forbes reported that Schnatter's comments were intended to demonstrate his stance against racism, but that callers were offended by them.
In a public statement, 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 apologise. Simply stated, racism has no place in our society.
But Dr Binna Kandola, psychologist and author of Racism at Work: the Danger of Indifference, is far from impressed by Schnatter's actions. He told indy100:
The Papa John’s incident is a clear example of leadership going awry. Those in positions of power are supposed to lead by example and encourage best practice within their organisation. Not only has John Schnatter not done that, but he remained in a position of power last year following his criticisms of the National Football League (NFL) for its inability to deal with race related protests.
This highlights the importance of leadership when addressing discrimination. Following the recent racist incident in Starbucks, the leadership team responded accordingly.
When the perpetrator in question is the leader, where does the responsibility lie to take action? Issues of this type need to be comprehensively addressed in the first instance by those in a position to do so, and this doesn’t only refer to blatant forms of discrimination. Subtle forms of racism are often disregarded. Now is the time to turn the spotlight on all forms, and ensure we create a safer society as a whole.