KFC Finalizes Deal to Replace Pepsi With Coca-Cola in US Restaurants Starting January

KFC has reached an agreement to make Coca-Cola its beverage supplier for US restaurants, ending a decades-long relationship with PepsiCo that began when Pepsi acquired KFC in 1986. The transition will begin in January, with all US locations expected to be serving Coca-Cola products by spring. KFC's international restaurants will continue to serve PepsiCo drinks.

The shift is historically significant: at the time of PepsiCo's 1986 acquisition, KFC had been Coca-Cola's second-largest fountain account in the US, trailing only McDonald's. PepsiCo later spun off KFC along with sister chains Pizza Hut and Taco Bell into what became Yum Brands, but the US restaurants retained Pepsi products throughout. KFC operates thousands of US locations under Yum Brands.

News of the deal rattled PepsiCo shares, which fell 1.1% to $127.80 following the initial Wall Street Journal report, reversing a session that had been mostly positive. Coca-Cola shares were roughly flat. KFC has been working to win back American diners who have shifted to rivals such as Chick-fil-A, and the beverage switch is part of a broader effort to refresh the chain's US presence.