October 16, 2026, 12:42 p.m. ET
KFC is replacing Pepsi with Coca-Cola at nearly 3,700 U.S. restaurants, ending a beverage partnership that dates back nearly four decades.
KFC and Coca-Cola then announced the new partnership in a joint statement, saying the transition would begin in January 2027 and that Coca-Cola products should be available in all U.S. locations by spring.
The partnership began after PepsiCo acquired KFC in 1986. PepsiCo spun off its restaurant operations from the company in 1997, but continued to supply beverages to KFC under its parent company, Yum Brands, Reuters reported.
In the announcement, KFC U.S. President Catherine Tan-Gillespie said the partnership would help modernize the chain and improve its restaurants and menus.
“I’m incredibly excited to bring KFC and Coca-Cola together,” Tan-Gillespie said in the release.
What drinks will KFC offer?
Coca-Cola’s beverage portfolio will replace Pepsi products in KFC’s U.S. restaurants. KFC’s current lineup in the United States includes Pepsi, Mountain Dew, Starry and Aquafina, as well as the chain’s lemonade and iced tea, according to the Wall Street Journal.
Coca-Cola’s portfolio includes drinks such as Sprite, Fanta and Dasani. However, KFC has not specified which Coca-Cola products will be available in its U.S. restaurants when the transition begins.
KFC said the new partnership could lead to additional beverage options and new food and drink combinations. The chain has already experimented with drinks such as iced coffees, boba drinks and shakes at its innovative Open House restaurant in McKinney, Texas, according to KFC’s announcement.
Dagmar Boggs, president of Coca-Cola’s foodservice and on-premises services in North America, said in the announcement that the companies could combine KFC’s food with Coca-Cola’s beverage portfolio and innovation capabilities to create new customer experiences and growth opportunities.
The companies did not disclose financial details of the deal, Reuters reported.
What the change means for PepsiCo
The loss of KFC’s U.S. business comes as PepsiCo strives to improve its soda sales amid rising costs and changing consumer preferences, Reuters reported. The company also faces pressure from activist investor Elliott Investment Management to improve its performance in North America.
KFC is one of Pepsi’s biggest sellers among U.S. restaurant chains, according to the Wall Street Journal.
“It’s just a bad look for PepsiCo… when you lose a marquee brand partner like that,” Jay Woods, chief market strategist at Freedom Capital Markets, told Reuters.
PepsiCo will continue to supply beverages to Taco Bell and KFC international restaurants. According to Reuters, Yum Brands recently renewed agreements covering both businesses, including a 10-year agreement with Taco Bell.
Why KFC is changing strategy
KFC is working to revive its U.S. business after years of declining sales and restaurant closures, The Wall Street Journal reported. The chain has expanded its focus beyond traditional chicken buckets to include sandwiches, wings and tenders, while also exploring new beverage offerings.
The Wall Street Journal also reported that restaurant chains are increasingly using drink specials and new menu combinations to attract customers.
Coca-Cola already has long-standing beverage partnerships with McDonald’s and Wendy’s, Reuters reported. The deal with KFC expands its presence in the fast-food market while ending one of PepsiCo’s long-standing relationships with restaurants.
Contributor: Reuters
Reporter Anthony Thompson can be reached at ajthompson@usatodayco.com or on X @athompsonUSAT
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