Pepsi loses KFC as Coca-Cola secures major deal

KFC will replace PepsiCo beverages with Coca-Cola products across its US restaurants by early 2027, ending a decades-long partnership with Pepsi.

The fast-food chain, owned by Yum Brands, announced the change on Thursday.

KFC has served Pepsi products in the United States since PepsiCo acquired the chicken chain in 1986. Although Pepsi later spun off KFC, Pizza Hut and Taco Bell, the restaurants continued their beverage partnership with the company. Some of KFC’s international locations already serve Coca-Cola products.

The switch comes as KFC works to attract more American customers and compete with rivals. The chain has been ceding ground to rival chicken chains for years. Once the US sales leader in 2012, it had fallen to fifth place by 2026, according to Technomic.

KFC US President Catherine Tan-Gillespie called the move a key step in the chain’s comeback strategy.

She said the partnership would help KFC introduce new drinks, respond to changing customer preferences and give diners more reasons to visit.

Beverages have become an important growth area for fast-food chains, with companies expanding their menus to include refreshers, iced coffees and specialty drinks. KFC recently introduced new beverages at its innovation restaurant in McKinney, Texas.

Losing ground in the fried-chicken business would add to Pepsi’s mounting challenges. The company’s stock has declined by double digits over the past year.

Shifting consumer habits and GLP-1 medications are weighing on its North American salty-snacks business. Pepsi also trails Coca-Cola in the US carbonated soft drink market, with about 26% share versus Coke’s 44%, according to Circana.

Pepsi will remain an important partner for Yum Brands and KFC’s international operations.