KFC to Replace Pepsi with Coca-Cola at 3,700 U.S. Restaurants Starting 2027

KFC's U.S. business, part of Yum! Brands (YUM), announced on Thursday, October 15, that it will replace PepsiCo with Coca-Cola as its beverage supplier at roughly 3,700 U.S. restaurants. The switch begins in January 2027, and Coca-Cola products are expected to reach all U.S. locations by spring. Financial details of the partnership were not disclosed.

The move ends a relationship of nearly four decades. PepsiCo acquired KFC in 1986 and spun off its restaurant businesses in 1997, but kept supplying beverages to KFC through Yum! Brands. The change applies to KFC's U.S. restaurants. Citing Reuters, Fox Business reports that PepsiCo recently renewed agreements covering Taco Bell and KFC's international restaurants, so those are not part of this switch.

Shares reacted unevenly on the day of the announcement. Yum! Brands rose about 2.8% to $150.83 and Coca-Cola was marginally higher, while PepsiCo fell about 0.7% by the close, after trading down about 1.1% intraday following an earlier Wall Street Journal report of advanced talks. Reports did not attribute these moves to the deal alone, and none of the coverage reviewed quantified how much revenue PepsiCo could lose from the KFC business.

What to watch: how smoothly the January rollout proceeds across the restaurant base, whether further details on contract terms surface, and whether PepsiCo (PEP) and Coca-Cola (KO) comment on the volume impact in upcoming earnings commentary. Investors may also watch whether other restaurant chains revisit their beverage agreements.