KFC has selected Coca-Cola as its soft drink supplier in the US, ending a longstanding arrangement with PepsiCo. The change marks a major shift in the fast-food chain’s beverage partnership.
KFC has selected Coca-Cola as its beverage partner for US restaurants, ending a relationship with PepsiCo that dates back approximately four decades.
The change, announced on October 15, will bring Coca-Cola products to all 3,718 KFC locations in the United States by spring 2027. The financial terms of the new partnership have not been disclosed.
The move marks a significant shift in the US fast-food beverage market and comes as PepsiCo works to improve its soft drink sales and address pressure on its broader business.
Why KFC Is Switching From PepsiCo to Coca-Cola
PepsiCo’s beverage partnership with KFC began when the company acquired the restaurant chain as part of its expansion into the food and snacks business. Although PepsiCo spun off KFC in 1997, it continued supplying beverages to the chain under its parent company, Yum Brands.
Losing KFC’s US business could be a setback for PepsiCo as it faces pressure from higher costs, changing consumer preferences, and efforts to improve growth and profit margins.
Jay Woods, chief market strategist at Freedom Capital Markets, said losing a major restaurant partner could affect perceptions of PepsiCo’s position in the market. Freedom Capital Markets holds shares in Coca-Cola.
PepsiCo CEO Ramon Laguarta said earlier in October that growth and margin recovery were taking longer than expected.
The company is also facing pressure from activist investor Elliott Investment Management, which has called for asset sales and improvements in PepsiCo’s North American business.
PepsiCo Retains Taco Bell and KFC International Deals
Despite losing KFC’s US beverage business, PepsiCo will continue supplying beverages to other restaurants under Yum Brands.
A PepsiCo spokesperson told Reuters that the company had recently renewed agreements covering Taco Bell and KFC’s international restaurants. The Taco Bell agreement runs for 10 years.
PepsiCo also supplies beverages to sandwich chains Subway and Jersey Mike’s Subs. Its portfolio includes Pizza Hut, which left the Yum Brands group in 2026 and switched from Coca-Cola to PepsiCo in 2011.
The KFC decision is not PepsiCo’s first major beverage partnership loss. In 2012, Dunkin’ switched from PepsiCo to Coca-Cola after a five-year relationship.
Coca-Cola Expands Its Restaurant Partnerships
The KFC agreement adds another major fast-food chain to Coca-Cola’s restaurant portfolio. The beverage company already has long-standing partnerships with burger chains McDonald’s and Wendy’s.
Under the new arrangement, Coca-Cola products are expected to reach KFC’s US restaurants by spring 2027. Neither company disclosed the financial details of the deal.
For Coca-Cola, the agreement expands its presence across a large national restaurant network. For KFC, the change marks a shift in its beverage offering after decades with PepsiCo.
What the Deal Means for PepsiCo
The loss of KFC’s US beverage business comes at a challenging time for PepsiCo, which is working to improve soft drink sales while managing higher costs and changing consumer preferences in its snack business.
The agreement also highlights how partnerships between major restaurant chains and beverage companies can shape distribution and brand visibility across the US food service market.
PepsiCo will retain its agreements with Taco Bell and KFC’s international restaurants, limiting the change to KFC’s US beverage operations.
The transition to Coca-Cola is expected to be completed by spring 2027, bringing an end to one of the fast-food industry’s longest-running beverage partnerships.
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Coca-Cola drinks are seen on display inside a Sainsbury’s supermarket in Cobham, Britain, October 2, 2024. REUTERS/Mina Kim/File Photo Purchase Licensing Rights
