KFC to drop Pepsi for Coca-Cola at U.S. restaurants after four decades
KFC will switch its U.S. restaurants from Pepsi to Coca-Cola drinks, ending a tie that began when PepsiCo bought the chain in 1986, CNBC and Fox Business reported. Coke should be in all U.S. stores by spring 2027, Reuters and Fox Business reported. PepsiCo keeps Taco Bell and KFC stores abroad, Reuters reported.
KFC will replace PepsiCo drinks with Coca-Cola beverages at its U.S. restaurants, CNBC, Reuters and Fox Business reported. The relationship dates to PepsiCo's 1986 purchase of the chain, CNBC and Fox Business reported. KFC has 3,718 U.S. locations, Reuters reported, while Fox Business put the figure at roughly 3,700.
The switch begins in January 2027, Fox Business reported, and Coke drinks are expected at all U.S. locations by spring 2027, according to Reuters and Fox Business. KFC U.S. President Catherine Tan-Gillespie said the chain expects to be pouring Coke in all U.S. restaurants by the end of the first quarter of 2027, CNBC reported. Financial details were not disclosed, Reuters reported.
"This decision is a critical step in the Kentucky Fried Comeback," Tan-Gillespie wrote in a memo to franchisees and employees, according to CNBC. The chain is trying to win back diners who have left for rivals such as Chick-fil-A and Popeyes, CNBC reported. Coca-Cola executive Dagmar Boggs said the deal could "unlock new growth possibilities together," Fox Business reported.
PepsiCo spun off KFC in 1997 but stayed the drink supplier for its parent company, Yum Brands, Reuters and Fox Business reported. Yum Brands and PepsiCo recently renewed deals covering Taco Bell and KFC's international restaurants, a PepsiCo spokesperson said, according to Reuters. The loss comes as PepsiCo works to improve U.S. soda sales, Reuters reported. "It is just a bad look for PepsiCo," said Jay Woods, chief market strategist at Freedom Capital Markets, which holds Coca-Cola shares, according to Reuters.
It is unusual for big restaurant chains to switch drink suppliers, CNBC reported, though PepsiCo won Subway from Coke in 2024, and Coke has lured Culver's, Arby's and Panda Express away from Pepsi in recent years.
What we know: KFC's U.S. restaurants will move from Pepsi to Coca-Cola drinks, with the change expected to be complete by spring 2027.
What we don't: The deal's financial terms and how much revenue PepsiCo stands to lose.
Where outlets agree CNBC, Reuters and Fox Business all report that KFC's U.S. restaurants will switch from Pepsi to Coca-Cola drinks.
Where they differ The outlets cited here report the same key facts so far.