On October 15 local time, KFC in the United States announced a new partnership with Coca-Cola, ending roughly 40 years of cooperation with Pepsi in the US market.
Starting in January 2027, KFC will move its US beverage partnership to Coca-Cola, and Coca-Cola products are expected to be available at all KFC restaurants across the country by spring 2027.
The move covers KFC's 3,718 stores in the United States, and the transaction amount was not disclosed.
KFC US President Catherine Tan-Gillespie said in a memo to franchisees and employees that this is "a key step in KFC's revival," and that the company will launch new beverage products through its partnership with Coca-Cola, gaining an innovation platform that gives customers more reasons to choose KFC.
This partnership that is about to end began in 1986. That year, Pepsi acquired KFC to expand its food and snack business, and at the time KFC was Coca-Cola's second-largest fountain beverage customer, behind only McDonald's. In 1997, Pepsi spun off its restaurant business, creating what later became Yum! Brands. For nearly three decades after that, the beverage counter at KFC in the United States belonged only to Pepsi.
However, this adjustment only involves US stores and does not involve mainland China. Tan-Gillespie pointed out that Pepsi remains an important partner of KFC's parent company and its international markets.
The operator of US stores is Yum! Brands (NYSE: YUM); the operator of KFC in mainland China is Yum China (NYSE: YUMC / 09987.HK), which was spun off from Yum! Brands in 2016 and listed independently. Yum! Brands no longer holds equity in it, and the two have separate boards of directors and two sets of balance sheets, with beverage contracts signed separately.
In terms of model, Pepsi has taken a different path in China: its beverage business operates through the "Kang-Pepsi Alliance," signed in November 2011 and approved by the Ministry of Commerce in March 2012, under which Tingyi Beverage became Pepsi's franchise bottler in China, responsible for the production and distribution of products such as Pepsi, Mirinda and 7UP.
Several KFC stores in Beijing and KFC customer service also said that they have not received any notice about changing the cola brand.
If the supplier is not being changed, what will Yum China rely on for growth?
As of the end of June 2026, Yum China had a total of 19,297 stores, including 13,789 KFC stores; according to its second-quarter 2026 financial report, KFC's average customer spending fell 3% year on year to 36 yuan, while same-store transaction volume grew 4%—using volume to make up for price. Its response is to create new categories and fill new time slots: KCOFFEE has more than 3,000 stores, KPRO has surpassed 450 stores, and the company also operates a coffee business through a joint venture with Lavazza.
Looking at the broader industry, KFC is not the only chain brand in recent years to change its beverage supplier.
In 2024, Subway switched from Coca-Cola to Pepsi; in 2025, Costco food courts switched to serving Coca-Cola; in July this year, Marriott International announced a switch to Coca-Cola, covering more than 10,000 hotels in 146 countries and regions worldwide, and is switching in stages. According to Circana's US carbonated soft drink retail data for the past 52 weeks, Coca-Cola had a share of about 44%, while Pepsi had about 26%.
On the day the news was announced, Yum! Brands closed up 2.82%, Coca-Cola rose 0.24%, and Pepsi fell 0.69%.
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