Coca-Cola to Replace PepsiCo at 3,600 KFC Restaurants in U.S.
Key Facts
Coca-Cola announced an agreement to supply beverages to all 3,600 KFC restaurants in the United States, replacing PepsiCo in a supply account held by its rival for decades. The agreement is part of the U.S. chain's turnaround effort, with Catherine Tan-Gillespie, president of KFC U.S., saying the partnership aims to "strengthen our restaurants and deliver a more relevant customer experience." For Coca-Cola, Dagmar Boggs, president of North America Foodservice & On-Premise, said the collaboration offers an opportunity to "unlock new avenues for growth together." The agreement adds the chicken chain to Coca-Cola's beverage supply relationships with major restaurant names, including McDonald's and Wendy's, according to Reuters. Financial terms of the partnership were not disclosed, the agency reported.
KFC faces a declining position in the U.S. chicken-chain market, according to figures from Technomic cited by the Associated Press. In 2015, the chain accounted for 20% of sales in that market, reflecting the scale of its presence among chicken-focused restaurant chains at the time. By 2025, its share of sales had fallen to 8%, according to the agency's comparison of the brand's changing position in the United States. The chain began its turnaround initiative in July 2025, before announcing the beverage supplier switch, which marks a subsequent step in that effort. The U.S. management team has made the customer experience and strengthening restaurants objectives of the new partnership, according to Tan-Gillespie's comments in Coca-Cola's statement.
The switch is tied to a long history between KFC and PepsiCo, which spun off the restaurant chain in 1997, according to Reuters. The beverage supply relationship continued after the spinoff, leaving PepsiCo as the chain's supplier despite the separation of restaurant ownership from its business. As the U.S. restaurants move to Coca-Cola, a PepsiCo spokesperson said the company and Yum! Brands had renewed agreements covering international KFC restaurants. The renewals also covered Taco Bell, preserving supply relationships between PepsiCo and the group's restaurant brands beyond the U.S. KFC account moving to its rival. The spokesperson added that the renewed beverage supply agreement with Taco Bell runs for 10 years, Reuters reported.
At the supplier the U.S. restaurants are leaving, PepsiCo reported 5% growth in net revenue for its North America beverage business in the third quarter of 2026 compared with the year-earlier period. The company attributed the growth primarily to benefits from acquisitions made in 2025, according to its earnings filing with the U.S. Securities and Exchange Commission. KFC, meanwhile, operates within a global network of 34,747 restaurants, according to Yum! Brands' second-quarter filing. Of those restaurants, 90% are outside the United States, where the PepsiCo supply agreements the spokesperson said had been renewed remain in place. Franchisees operated 99% of KFC restaurants as of June 30, 2026, according to the same filing.
KFC's experiments to develop its offerings include a restaurant called "Open House" in McKinney, Texas, according to the Associated Press. The restaurant is testing breakfast service, a first for the chain in the United States, the agency reported. In Britain, KFC offers a range of drinks under its "Quench" menu, according to the chain's local website, including options beyond traditional soft drinks. The menu includes sparkling lemonade and boba drinks, alongside "Krunch" shakes listed among the chain's offerings to consumers there. The British range also includes iced coffee, another part of the brand's beverage offerings outside the U.S. market covered by the Coca-Cola agreement.
The transition to Coca-Cola beverages at U.S. KFC restaurants will begin in January 2027, according to the timetable the company announced in its partnership statement. That date marks the start of the supplier change in restaurants following the announcement of the agreement between the two companies. The companies expect Coca-Cola beverages to be available at all of the chain's U.S. restaurants by spring 2027. Implementation will therefore run from the start of the transition in January to its expected completion in the spring, according to the announced plan. The transition remains limited to U.S. restaurants, alongside the continuation of PepsiCo's renewed agreements with international KFC restaurants and Taco Bell.