KFC Ends 40-Year Pepsi Partnership and Is Switching to Coca-Cola Nationwide

A Decades-Long Relationship Comes to an End

When PepsiCo bought KFC back in 1986, it locked in one of the most consequential beverage deals in fast food history. For nearly four decades, every fountain drink poured at a KFC in the United States came from the Pepsi family. That era is now officially over. KFC is ending its nearly four-decade partnership with PepsiCo and switching to Coca-Cola as its beverage supplier across its more than 3,700 U.S. restaurants.

For KFC, the move is something of a return. Before 1986, most of its restaurants poured Coke, and the chain was Coca-Cola's second-biggest fountain drink customer, behind only McDonald's. In other words, Pepsi was never KFC's original partner — it was the result of a corporate acquisition. PepsiCo separated its restaurant businesses from the company in 1997 but continued supplying beverages to KFC under its parent company, Yum Brands. That arrangement held for nearly three more decades, until now.

What's Driving the Switch

KFC is framing the switch as part of a broader overhaul of the brand. KFC U.S. President Catherine Tan-Gillespie said the partnership "is about more than what's in the cup," calling it another step toward modernizing the chain and its restaurants for today's customers. The fried chicken chain has been under pressure to win back diners, and a high-profile beverage rebrand sends a clear signal that something is changing.

KFC said the new partnership could lead to additional beverage options and new food-and-drink combinations. A number of restaurants, including McDonald's and Taco Bell, have broadened their drink offerings with options such as refreshers or "dirty soda." For its part, KFC recently unveiled new drinks, including iced coffees and shakes, at Open House, its innovation restaurant in McKinney, Texas. Teaming up with Coca-Cola's expansive portfolio gives KFC a stronger platform to compete in that space.

Big Money and Bigger Implications for Pepsi

The stakes here go well beyond soda preferences. Bank of America analysts say the move puts around $500 million in annual sales at stake for Pepsi's beverage business. That represents about 3 percent of Pepsi Beverages North America's concentrate sales, according to Reuters. Losing a partner of KFC's scale is a meaningful blow, not just financially but symbolically.

Jay Woods, chief market strategist at Freedom Capital Markets, said losing a major restaurant partner such as KFC could hurt PepsiCo's image and add to the challenges facing the company. It's also a continuation of a troubling trend for Pepsi. In 2024, Pepsi poached Subway from Coke, but Coke has since wooed away a number of notable Pepsi customers in recent years, including Culver's, Arby's, and Panda Express. KFC is the biggest name yet on that list.

What Comes Next

Beginning in January 2027, KFC will transition its U.S. beverage partnership, with Coca-Cola products expected to be served in all restaurants by spring 2027. KFC has not yet specified which Coca-Cola products will be available at its U.S. restaurants when the transition begins. That announcement will likely generate its own wave of attention, particularly if the chain introduces exclusive or co-branded drink options.

PepsiCo remains the supplier to Taco Bell and KFC restaurants outside the United States, so the split is not total — but in the world's largest fast food market, the message is unmistakable. Coca-Cola is aggressively expanding its footprint at the drive-through, and KFC's embrace of the red cup over the blue one could accelerate that momentum further. For consumers, the change may seem minor. For the two beverage giants locked in a perpetual battle for shelf space and fountain real estate, it's anything but.