KFC will replace PepsiCo beverages with Coca-Cola products across its U.S. restaurant locations by the end of the first quarter of 2027, marking the chain's first supplier switch in decades. The change ends a relationship that began when Pepsi acquired KFC in 1986. Though Pepsi later spun off KFC as part of Yum Brands, the chain remained loyal to its former owner until now.
KFC U.S. President Catherine Tan-Gillespie described the shift as "a critical step in the Kentucky Fried Comeback" in a memo to franchisees and employees obtained by CNBC. She stated that the new partnership "gives us a platform to innovate, meet changing tastes and give customers more reasons to choose us."
The move reflects KFC's effort to recapture U.S. market share lost to competitors including Chick-fil-A and Popeyes. Fast-food chains increasingly use beverage offerings as a competitive tool. McDonald's and Taco Bell have expanded their drink menus with refreshers and specialty sodas. KFC recently introduced iced coffees and shakes at its innovation restaurant in McKinney, Texas. Coca-Cola told CNBC it has worked with restaurant partners to develop new beverages.
The switch affects only KFC's U.S. operations. Many of KFC's international markets already serve Coke products, and Tan-Gillespie noted that Pepsi remains an important partner for Yum Brands and KFC's international markets. However, the change creates complications for sister chain Taco Bell, which serves Mountain Dew Baja Blast, a PepsiCo product, as a signature item.
Large restaurant chains rarely switch beverage suppliers, but recent years have seen notable shifts. Coca-Cola recently gained Culver's, Arby's and Panda Express from Pepsi. In 2024, Pepsi acquired Subway, the largest U.S. restaurant chain by location count, from Coca-Cola. For decades, the two beverage giants have competed fiercely for restaurant partnerships, which provide both direct sales revenue and brand visibility opportunities.