KFC ends 40-year PepsiCo partnership to serve Coca-Cola in U.S. restaurants
KFC has announced it will transition its beverage supplier in the United States from PepsiCo to Coca-Cola, concluding a partnership that has lasted four decades. The rollout is scheduled to begin in January 2027, with the company expecting to complete the change across all 3,718 domestic locations by the spring of that year.
The move marks a significant shift for the fried chicken chain, which has maintained an exclusive relationship with PepsiCo since the beverage company acquired KFC in 1986. Although PepsiCo spun off its restaurant division as Tricon Global Restaurants (now Yum! Brands) in 1997, the beverage exclusivity remained in place for the U.S. market until now.
The beverage switch is a key pillar of the ‘Kentucky Fried Comeback’ strategy led by U.S. leadership.
KFC U.S. President Catherine Tan-Gillespie identified the supplier change as a core component of the “Kentucky Fried Comeback,” a strategic revitalization plan designed to modernize the brand and regain market share. As part of this broader evolution, the chain has been testing new menu formats, including boba and shakes, at its “Open House” innovation restaurant in McKinney, Texas. The move to Coca-Cola is intended to align the brand with broader consumer preferences as it seeks to compete more aggressively with rivals like Chick-fil-A.
Status of Sister Brands
While KFC is moving to Coca-Cola, the shift does not currently extend to other subsidiaries under the Yum! Brands umbrella. Taco Bell and Pizza Hut will maintain their existing contracts with PepsiCo. Notably, Taco Bell recently signed a 10-year renewal to continue serving PepsiCo products, highlighting a fragmented beverage strategy within the parent company’s portfolio.
The transition is limited to KFC’s U.S. operations. International locations, which often operate under different franchise agreements and regional supply chains, are not currently part of this specific supplier transition.
Market Reaction and Financial Impact
Investors reacted positively to the announcement of the new partnership. Following the news, Yum! Brands shares rose approximately 2.7%. Conversely, PepsiCo shares saw a decline of 0.7% in the period immediately following the report.
For Coca-Cola, the deal represents a major win in the competitive “fountain” segment of the fast-food industry. For PepsiCo, the loss of the KFC contract ends a long-running era of synergy between the soft drink maker and the chicken chain, though the company retains its presence in thousands of other Yum! Brands locations worldwide.
