KFC Replaces Pepsi With Coca-Cola at US Restaurants

KFC is ending one of the longest beverage partnerships in fast food. The fried chicken chain announced Thursday that it will replace Pepsi with Coca-Cola at its U.S. restaurants, closing a relationship that lasted roughly four decades. The switch affects about 3,700 U.S. locations.

The chain will begin transitioning to Coca-Cola products in January 2027. KFC expects the new beverages to reach every U.S. location by spring. The agreement also leaves room for new food-and-drink combinations and additional beverage options as the chain expands its lineup.

How a 40-Year Pepsi Partnership Began

The relationship dates to 1986, when PepsiCo bought KFC. PepsiCo spun the chain off in 1997, but it kept supplying drinks to KFC through the chain’s parent company, Yum! Brands. That supply link has now run for nearly 40 years.

KFC President Catherine Tan-Gillespie described the deal as part of a broader effort to modernize the chain and give customers more reasons to visit. She framed the move as more than a change of soda brands.

“I’m incredibly excited to bring KFC and Coca-Cola together,” Tan-Gillespie said in a statement.

“These are two originals, with deep consumer love,” she continued. “This partnership is about more than what’s in the cup. It is another step in our work to evolve KFC, strengthen our restaurants, menu offerings and create a more relevant experience for today’s customers.”

Coca-Cola’s Dagmar Boggs, president of foodservice and on-premise, also welcomed the partnership. She sees the pairing as a growth opportunity for both brands.

“By pairing KFC’s iconic food and flavors with the breadth of Coca-Cola’s beverage portfolio and innovation capabilities, we have an incredible opportunity to make every visit more refreshing, create memorable consumer experiences and unlock new growth possibilities together,” Boggs said in a statement.

What the Deal Means for Each Beverage Giant

Neither company disclosed financial terms, so outsiders cannot gauge how much revenue changes hands. PepsiCo brought in $98.24 billion in trailing revenue from drinks and snacks, so one chain’s U.S. fountain business likely represents a small slice. The symbolic weight is harder to dismiss, because a former PepsiCo-owned chain has now picked its biggest rival.

Coca-Cola can now point to that choice when it pitches other restaurant chains. Fountain contracts matter because they put a brand in front of customers at every meal, and that exposure can carry over to what people buy in stores. Before KFC, Coke won back Marriott International after 34 years.

Coca-Cola Chief Executive Henrique Braun addressed that win on the company’s July earnings call.

On the July earnings call, Chief Executive Henrique Braun said, “We earned it back because we are consumer and customer centric like never before.”

Product results back up the pitch. Coca-Cola Zero Sugar volume rose 16% in the second quarter, and Coke raised its 2026 comparable earnings-per-share growth outlook to 9% to 10%.

Wall Street Already Favored Coke

The market had already opened a wide gap between the two stocks. Coca-Cola closed at $92.00 on October 15, close to its 52-week high of $94.10. PepsiCo closed at $128.38, not far above its 52-week low of $123.47.

Coke shares are up 34.16% this year, while PepsiCo is down 7.83%. The KFC news mostly reinforces a divide that investors had already priced in. Shares of Yum! Brands traded at $150.83, up 2.82%, or $4.14.

PepsiCo Keeps Other Restaurant Partners

PepsiCo did not lose every major account. The company recently renewed agreements covering Taco Bell and KFC’s international restaurants. Those renewals tie PepsiCo to markets where EMEA and Asia Pacific each posted 9% organic revenue growth last quarter.

Despite losing KFC’s U.S. business, PepsiCo still maintains beverage partnerships with several major restaurant chains. The loss therefore stings more as a reputational blow than as a revenue hit. Still, the timing puts a spotlight on PepsiCo’s domestic business as earnings season approaches.

For KFC, the switch is a visible piece of a larger overhaul. The chain wants to strengthen its restaurants and menu offerings and build a more relevant experience for today’s customers. A new beverage lineup in January 2027 will give diners the first obvious sign of that change at the fountain.