Mr. Schnatter already had resigned earlier this year as CEO of the chain, which he built into a national powerhouse, over a sponsorship quarrel with the NFL over the national anthem protests and Papa John's dipping sales.
"On the May call, Schnatter was asked how he would distance himself from racist groups online", a source said in a Forbes report Wednesday. He then complained that Sanders never faced public backlash.
Though he apparently wanted to convey his disapproval to racism, several individuals on the call found it to be offensive.
After Forbes' story ran, Schnatter, through Papa John's, issued a statement confirming he used the slur.
"The statements made on our earnings call were describing the factors that impact our business and we sincerely apologize to anyone that thought they were divisive".
"We've got to own up and take the hit for our missteps and refocus on the constant pursuit of better that is the DNA of our brand", Ritchie said.
"NFL leadership has hurt Papa John's shareholders", Schnatter said at the time.
Pointing out in November the status of Papa John's as a major advertiser during NFL games and corporate partner of the league, Schnatter linked his company's earnings to the NFL's sagging TV ratings.
"The call was arranged between Papa John's executives and marketing agency Laundry Service".
"Papa John's will appoint a new Chairman of the Board in coming weeks", the company said.
John Schnatter confirmed using the slur in an emailed statement to Forbes, which first published the account of the conference call.
Papa John's and Laundry Service did not immediately respond to Newsweek's request for comment.
It's unclear if Schnatter will face discipline for his remarks.
Schnatter, a longtime donor to U of L and the namesake of Papa John's Cardinal Stadium, has served on the university's governing board since 2016, when Republican Gov. Matt Bevin ushered in a new slate of trustees.