Pizza chain Papa John's International Inc (PZZA.O) said on Wednesday its founder and former chief executive, John Schnatter, resigned as chairman of the board.
The company said Olivia Kirtley would act as lead independent director, and added it would appoint a new chairman in the coming weeks.
The resignation comes after Forbes reported earlier in the day that Schnatter used a racial slur on a conference call.
"Papa John's condemns racism and any insensitive language, no matter the situation or setting ... We take great pride in the diversity of the Papa John's family, though diversity and inclusion is an area we will continue to strive to do better," the company said in a separate statement.
Schnatter, who founded the company in 1984, resigned as chief executive in December last year, after drawing criticism for comments he made at the National Football League (NFL) leadership.
Yum Brands Inc's (YUM.N) Pizza Hut replaced Papa John's as NFL's sponsor in February, ending Papa John's eight-year relationship with the top U.S. football league.
Papa John's shares closed nearly 5 percent down at $48.33 on Wednesday.