He didn’t quote someone else he attributed its use to someone else in a setting he felt safe casually using the n-word. He could have been more racist in its use, but casually tossing the n-word out there is still a trait of racist people. Especially ones on the phone with a PR group that is looking to turn all the examples of how Papa John is racist around.
Context is still very important, and your defense of him (that he didn’t directly use the n-word) is similar to his own defense (the real racist are the ones that beat black people to death in my hometown). Not saying you are racist, just pointing out that Papa John on his best behavior in private still managed to be some magnitude of racist just like he has been on his public business conference calls.