Papa John's founder and executive chairman John Schnatter resigned Wednesday following a public apology for using a racial slur on a conference call in May.
The pizza stock surged more than 5% in early trading Thursday, erasing some of its heavy losses from Wednesday.
Shares of Papa John's were up more than 5% in early trading Wednesday following the resignation of founder and executive chairman John Schnatter, who on Wednesday apologized for using a racial slur on a May conference call with company executives and an outside marketing agency.
"News reports attributing the use of inappropriate and hurtful language to me during a media training session regarding race are true," Schnatter said in a statement to Business Insider, alluding to Forbes' first reporting of the incident. "Regardless of the context, I apologize. Simply stated, racism has no place in our society."
The Louisville, Kentucky-based pizza chain said in a press release that it would announce a new chairman in the coming weeks.
"Our company was built on a foundation of mutual respect and acceptance," the company's apology said. "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 once generated annual revenue of more than $1.7 billion, but took a hit following the NFL controversy. Its stock plummeted 11% soon after an earnings call that addressed the scandal, according to Forbes. Schnatter resigned as CEO in January but remained on the board.
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.
Papa Johns were down almost 14% this year through Wednesday.
Kate Taylor and David Choi contributed to this report.