KFC drops PepsiCo for Coca-Cola at 3,718 US restaurants after more than 40 years
KFC U.S. will replace PepsiCo with Coca-Cola as its drink supplier from January 2027, ending a tie that began in 1986. The change covers 3,718 US locations by Reuters' count, one Yum brand in one market.
The Investor · Invest desk
Key figures. An estimate, not a reported rate: if conversion starts in January 2027 and ends by the end of March 2027 at an even pace, about 1,240 restaurants a month must switch. KFC has 3,718 US locations, per Reuters. From 1986 to January 2027 is 41 calendar years of Pepsi supply.
| Figure | Value | Note | Claim |
|---|---|---|---|
| If all switch evenly, January to end of March 2027 | 1,240 a month, about | estimate assuming an even pace | 19 |
| KFC US, per Reuters | 3,718 locations | 15 | |
| Pepsi supply, 1986 to Jan 2027 | 41 calendar years | 17 |
What happened
- Catherine Tan-Gillespie, president of KFC U.S., said KFC expects to be pouring Coke beverages in all of its US restaurants by the end of the first quarter of 2027.
- A PepsiCo spokesperson told Reuters that Yum and PepsiCo have renewed agreements covering Taco Bell and KFC International stores, with the Taco Bell agreement running 10 years.
- KFC called the Coca-Cola deal part of its Kentucky Fried Comeback plan, as it works to win back US customers lost to rivals such as Chick-fil-A and Popeyes.
- The companies plan to develop food-and-drink pairings and expand beverage choices, according to the release.
Why it matters
- What it limits constraint Taco Bell is harder to move: CNBC says the chain would not serve Mountain Dew Baja Blast without Pepsi, so Yum has little room to repeat the KFC switch there.
- What it sets up precedent Among the moves CNBC names, Coke has at least four wins from Pepsi against one named for Pepsi, Subway in 2024, so large chains do change beverage suppliers in both directions.
- What it costs cost Conversion runs on a short clock: from January to the end of March 2027 at an even pace, KFC and Coca-Cola would convert about 1,240 restaurants a month.
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Of the Yum arrangements the sources name (KFC U.S., Taco Bell and KFC International), Coca-Cola took one and PepsiCo kept two [18], or rather kept two that a PepsiCo spokesperson says were renewed [6]. We think that makes the KFC move a brand-level decision, and the idea that an entrenched supplier tie can be rebid holds here for the one brand where Yum chose to rebid. The counter-thesis is a package, in which Yum may have traded the renewals against the KFC exit. Tan-Gillespie said Pepsi remains an important partner for the parent company and for the chain's international markets [11].
The stated reason is the product. "This partnership is about more than what's in the cup," Tan-Gillespie said in a statement [9]. KFC's Open House restaurant in McKinney, Texas, recently introduced iced coffees, boba and shakes [12], and Coke told CNBC earlier this year that it has helped many of its restaurant partners create new drinks [13]. We think drink development is the draw for a chain in the middle of a turnaround.
Price is the counter-thesis, and it cannot be tested yet: Reuters reported that financial terms were not disclosed [16]. A large payment from Coke would make price the main reason, and we would drop the product reading if terms later showed one.
The history is less tidy than the "first time" language. CNBC calls this the first change of drink supplier at KFC in decades [2], and the US restaurants have poured Pepsi since it bought the chain in 1986 [3], a run of more than 40 years by the calendar [17]. Dagmar Boggs, president of Foodservice & On-Premise, North America, at Coca-Cola, said in a statement that the partnership brings Coca-Cola and KFC together across the US for the first time [10]. CNBC adds that when Pepsi bought KFC the chain was Coke's second-largest fountain account, behind McDonald's [5].
What to watch
- Whether Yum, Coca-Cola or PepsiCo disclose financial terms; a large payment from Coke would move the read from product to price.
- Whether all of KFC's US restaurants pour Coke by the end of March 2027, the date Tan-Gillespie gave.
- Whether the food-and-drink pairings and wider beverage choices the companies promised show up on KFC menus.
Information, not investment advice. This story is general information about companies and markets, drawn from cited reporting. It is not a recommendation to buy, sell or hold any security; check the cited sources before acting.
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- [1]
KFC U.S., a Yum Brands chain, announced a new beverage partnership with The Coca-Cola Company, with the transition from PepsiCo set to begin in January 2027.
- [2]
CNBC reports the switch is the first time in decades that KFC has changed its drink supplier.
- [3]
KFC's US restaurants have stuck with PepsiCo drinks ever since Pepsi bought KFC in 1986.
- [4]
KFC expects to be pouring Coke beverages in all of its US restaurants by the end of the first quarter of 2027, Catherine Tan-Gillespie, president of KFC U.S., said.
- [5]
At the time of Pepsi's 1986 acquisition of KFC, the chain was Coke's second-largest fountain account, trailing only McDonald's.
- [6]
A PepsiCo spokesperson told Reuters that Yum Brands and PepsiCo have renewed agreements covering Taco Bell and KFC International stores, and that the Taco Bell agreement runs 10 years.
- [7]
Without Pepsi, Taco Bell would not serve its Mountain Dew Baja Blast.
- [8]
KFC described the Coca-Cola deal as part of its Kentucky Fried Comeback plan; KFC is working to regain US customers lost to competitors such as Chick-fil-A and Popeyes.
- [9]
"This partnership is about more than what's in the cup," Catherine Tan-Gillespie, president of KFC U.S., said in a statement.
- [10]
Dagmar Boggs, president of Foodservice & On-Premise, North America, at The Coca-Cola Company, said in a statement that the partnership brings Coca-Cola and KFC together across the US for the first time.
- [11]
Tan-Gillespie said Pepsi remains an important partner for KFC's parent company and the chain's international markets.
- [12]
KFC's Open House innovation restaurant in McKinney, Texas, recently introduced a lineup that includes iced coffees, boba and shakes.
- [13]
Coke told CNBC earlier this year that it has helped many of its restaurant partners create new drinks.
- [14]
The companies plan to develop food-and-drink pairings and expand beverage choices, according to the release.
- [15]
KFC has 3,718 US locations.
- [16]
Financial terms of the KFC and Coca-Cola deal were not disclosed.
- [17]
The Pepsi supply run lasts more than 40 years: from 1986 to January 2027 is 41 calendar years.
- [18]
Three Yum arrangements are named in the sources (KFC U.S., Taco Bell, KFC International); Coca-Cola takes one and PepsiCo keeps two.
- [19]
If conversion starts in January 2027 and ends by the end of March 2027 at an even pace, about 1,240 restaurants a month must switch.
- [20]
In 2024, Pepsi poached Subway, the largest US restaurant chain by number of locations, from Coke.
- [21]
Besides KFC, Coke has wooed away Pepsi customers in recent years including Culver's, Arby's and Panda Express.
- [22]
Among the moves CNBC names, Coke has at least four wins from Pepsi (KFC, Culver's, Arby's, Panda Express) against one named for Pepsi (Subway).
Sources
3 independent publishers whose own reporting we read for this story.
- cnbc.comKFC to switch to Coca-Cola beverages in U.S. restaurants for the first time in decades
1 article · October 15, 2026
- dexerto.comKFC is dropping Pepsi for Coke after 40 years and fans could lose exclusive Mountain Dew flavor
1 article · October 16, 2026
- qz.comKFC will switch its U.S. restaurants from PepsiCo to Coca-Cola drinks in 2027
1 article · October 16, 2026
Topics and entities
Topics
- Beverage supply contracts
- Quick-Service Restaurants