KFC will replace PepsiCo beverages with Coca-Cola products across its U.S. restaurants by the end of the first quarter of 2027, ending a relationship that stretches back nearly four decades to PepsiCo's 1986 acquisition of the chicken chain.
The switch marks the first major beverage supplier change for KFC's U.S. operations in decades, though international KFC locations already serve Coke products. When PepsiCo spun off KFC in the 1990s along with Pizza Hut and Taco Bell to form Yum Brands, the company maintained its loyalty to Pepsi. That commitment has kept Taco Bell locked into serving Mountain Dew Baja Blast, a PepsiCo product unavailable through competing suppliers.
KFC U.S. President Catherine Tan-Gillespie said in a memo to franchisees and employees that the partnership "is a critical step in the Kentucky Fried Comeback." She framed the move as a way to innovate and meet shifting consumer preferences.
The company faces stiff competition from rivals like Chick-fil-A and Popeyes, which have captured market share from KFC in recent years. Fast-food beverage menus have become central to attracting customers, with chains introducing refreshers, specialty drinks and limited-edition sodas to expand appeal. KFC recently tested new drinks including iced coffees and shakes at an innovation restaurant in McKinney, Texas.
Coca-Cola has positioned itself as a development partner for restaurants seeking to expand their drink portfolios, according to statements to CNBC.
Large restaurant chains rarely switch beverage suppliers, but precedent exists. Pepsi signed Subway, the largest U.S. restaurant chain by location count, away from Coca-Cola in 2024. Coca-Cola has recently poached several notable accounts from Pepsi, including Culver's, Arby's and Panda Express.
Tan-Gillespie noted that PepsiCo remains an important partner for Yum Brands overall and for KFC's international operations, suggesting the shift targets U.S. market dynamics specifically.