October 15, 2026 | Restaurants & Consumer Business

LOUISVILLE, Ky. — KFC is ending its nearly four-decade relationship with PepsiCo and switching to Coca-Cola across approximately 3,700 U.S. restaurants, delivering a major victory to Coca-Cola in the longstanding battle for restaurant beverage contracts.

The decision, announced Thursday, marks a significant loss for PepsiCo, which once owned KFC and continued supplying its restaurants long after selling the chain in 1997.

Coca-Cola products are expected to begin appearing in U.S. KFC restaurants in 2027, with the transition beginning in January and broader availability expected by spring.

Financial terms were not disclosed.

A Major Blow to PepsiCo

KFC operates approximately 3,718 restaurants across the United States, representing a substantial beverage distribution opportunity.

Restaurant fountain contracts provide beverage companies with more than direct sales. They create consumer exposure, predictable demand and long-term relationships with major foodservice operators.

Losing KFC comes at a difficult time for PepsiCo, which has been working to improve performance in its North American beverage business amid changing consumer preferences and pressure on sales volumes.

The relationship dates back to 1986, when PepsiCo acquired Kentucky Fried Chicken for approximately $840 million.

PepsiCo later separated its restaurant operations into a publicly traded company that eventually became Yum Brands. Despite the separation, KFC continued serving Pepsi beverages for decades.

The new agreement brings that history to an end in the United States.

Why KFC Is Making the Switch

KFC has been working to strengthen its position in the increasingly competitive American chicken restaurant market.

Chains are competing aggressively on pricing, menu innovation and customer loyalty as consumers become more selective about restaurant spending.

Beverages represent an important source of restaurant profitability because fountain drinks generally carry attractive margins compared with many food items.

KFC has also been expanding its beverage offerings, including specialty lemonades and other drinks aimed at attracting younger customers.

Switching to Coca-Cola gives the chain access to one of the world’s largest beverage portfolios and a new opportunity to market its food-and-drink combinations.

Pepsi Keeps Taco Bell and International KFC

The decision does not end PepsiCo’s broader relationship with Yum Brands.

PepsiCo recently renewed beverage supply agreements covering Taco Bell and KFC’s international operations, including a 10-year agreement with Taco Bell.

Those contracts remain important because Yum operates tens of thousands of restaurants internationally through its brands and franchise networks.

The American KFC business, however, represents a high-profile loss in PepsiCo’s home market.

What It Means for the Beverage Industry

The deal strengthens Coca-Cola’s already extensive presence in American restaurants, where it supplies numerous major chains.

For beverage companies, winning restaurant contracts can secure years of recurring sales while putting their products directly in front of millions of customers.

For KFC franchise operators, the transition will involve replacing or modifying beverage dispensing equipment, adjusting inventory and preparing restaurants for the new lineup.

Customers will ultimately see the most visible change: Coca-Cola products replacing Pepsi beverages alongside KFC’s chicken meals.

The decision underscores how fiercely beverage manufacturers compete for restaurant partnerships, even when those relationships have lasted generations.

JBizNews Desk | Louisville, Kentucky

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