For almost four decades, a bucket of KFC chicken in America came with a Pepsi. That is about to change. On Thursday, 15 October 2026, KFC announced that its US restaurants will stop serving PepsiCo drinks and switch to Coca-Cola products, ending a partnership that dates back to 1986. It is a significant win for Coca-Cola in the long-running cola wars, and the latest move in KFC's effort to revive its US business.
The key facts
| Detail | What we know |
|---|---|
| Restaurants affected | Roughly 3,700 KFC restaurants in the US |
| Switch begins | January 2027 |
| Completed | Coca-Cola drinks in all US restaurants by spring 2027 |
| Outside the US | PepsiCo remains KFC’s drinks partner internationally |
| Partnership age | Since 1986, when PepsiCo bought KFC |
Why Pepsi was at KFC in the first place
PepsiCo bought KFC in 1986 and, unsurprisingly, made Pepsi the only soft drink in its US restaurants. PepsiCo also owned Pizza Hut and Taco Bell. In 1997 it spun off all three chains into a separate company, which became Yum! Brands, but the drinks partnerships continued. PepsiCo recently renewed its agreements covering Taco Bell and KFC's international restaurants, according to Reuters reporting.
Why KFC is switching
KFC President Catherine Tan-Gillespie described the two brands as "originals" that customers love, and said the deal is about more than the drink: it is part of a wider effort to modernise KFC's restaurants, menu and customer experience. Coca-Cola's foodservice president for North America, Dagmar Boggs, said the agreement brings the two brands together across the US for the first time.
The switch is part of a turnaround plan after years in which KFC lost market share in the US chicken category to rivals such as Popeyes and Chick-fil-A. The plan includes:
- value deals and the return of fan favourites such as potato wedges and popcorn chicken;
- new drinks: KFC's new prototype restaurant in McKinney, Texas, has a "Sips" menu of lemonades, boba refreshers and shakes;
- new food-and-drink combinations that KFC says Coca-Cola's wider range makes possible.
How investors reacted
When The Wall Street Journal first reported the deal was close on 15 October, PepsiCo shares dipped about 1.1%. By the close on 16 October, however, the market had moved on: PepsiCo was up about 2.4%, Coca-Cola up about 2.1%, and Yum! Brands roughly flat. For PepsiCo, which reported $7.7 billion in North American beverage sales in its third quarter alone, KFC's US fountain business is a small slice of revenue, but the symbolism matters.
The bigger cola wars picture
Restaurant and hospitality contracts are a key battleground for Coca-Cola and PepsiCo, because they shape what millions of people drink every day. The Motley Fool, which estimates the KFC loss at around $50 million in annual revenue for PepsiCo, notes that this follows other recent switches to Coca-Cola by Marriott and Costco. PepsiCo also cut its full-year 2026 guidance earlier in October.
What happens next
The changeover begins in January 2027. Watch for PepsiCo's response, whether it targets other chains, and whether more restaurant groups review their drinks contracts. For more business news, read about SoftBank's talks to buy Allied Universal.
Frequently asked questions
When will KFC start serving Coca-Cola?
From January 2027, with all US restaurants expected to switch by spring 2027.
Will KFC outside the US change too?
No. PepsiCo remains KFC's beverage partner outside the United States.
Why did KFC serve Pepsi?
PepsiCo owned KFC from 1986 until it spun off its restaurant chains as Yum! Brands in 1997, and the Pepsi partnership continued after that.
Sources
- Nation’s Restaurant News – KFC U.S. switches from Pepsi to Coke (15 Oct 2026)
- Fox Business – KFC replacing Pepsi with Coca-Cola at 3,700 US restaurants (16 Oct 2026)
- MarketScreener / Dow Jones – PepsiCo shares dip on WSJ report of KFC nearing switch to Coca-Cola (15 Oct 2026)
- The Motley Fool – PepsiCo was just dealt another blow by Coca-Cola (19 Oct 2026)
