KFC Drops Pepsi for Coke in 2027 as U.S. Sales Slip 2%

KFC will start replacing Pepsi with Coca-Cola at its U.S. restaurants in January 2027, and Yum! Brands' latest results show why the chain wants a reset: KFC's U.S. system sales fell 2% in the second quarter while Taco Bell's U.S. sales, which stay with Pepsi, rose 9%. A new soda supplier does not explain that gap on its own, and neither company has disclosed financial terms.

What Changes for Diners, and When

The Wall Street Journal first reported the switch on Oct. 15, according to Reuters. KFC's own release on PR Newswire, issued at 3:33 p.m. ET that day, says Coke products will begin rolling out in January 2027 and be served at all U.S. KFC restaurants by spring 2027, and the Coca-Cola Company's announcement says the same. KFC U.S. President Catherine Tan-Gillespie also said KFC expects to be pouring Coke in all of its U.S. restaurants by the end of the first quarter of 2027, CNBC reported. In a memo to franchisees and employees obtained by CNBC, she called the decision "a critical step in the Kentucky Fried Comeback."

KFC's current fountain lineup includes Pepsi and Pepsi Zero Sugar, Starry, Mountain Dew, a KFC exclusive called Mountain Dew Sweet Lightning, and Aquafina, according to Parade, via AOL. Those drinks go away as Coke products arrive. The announcement and the coverage we reviewed do not mention menu prices, and Reuters, as republished by Hospitality Ireland, noted that financial details of the deal were not disclosed.

The Sales Backdrop in Yum's Own Numbers

Yum's second-quarter earnings release, filed July 30, reports "system sales," which count sales at every restaurant, company-owned and franchised. Growth below excludes currency effects.

Measure, second quarter 2026	Change from a year earlier
KFC U.S. system sales	Down 2%
KFC worldwide system sales	Up 6%
KFC worldwide same-store sales	Up 2%
Taco Bell U.S. system sales	Up 9%
Taco Bell U.S. same-store sales	Up 7%

KFC U.S. was also down 2% for the first half of the year, and the release shows the U.S. made up 12% of KFC's system sales in 2025. Taco Bell is the useful comparison. A PepsiCo spokesperson told Reuters that Yum and PepsiCo just renewed agreements across Taco Bell and KFC International, with a 10-year term for Taco Bell. So Taco Bell, whose U.S. sales are growing, is the Yum chain keeping Pepsi. That is a gap the supplier alone does not explain, and the data cannot isolate the effect of a drink supplier.

The switch will likely land mostly on franchisees. Yum's second-quarter 10-Q says 99% of KFC Division units are run by franchisees, and it shows $28 million of company sales from KFC restaurants in the U.S. for the quarter. Twelve percent of the $36.4 billion in KFC Division system sales that Yum reported in its 2025 annual report is about $4.4 billion a year, or roughly $1.1 billion a quarter. With U.S. sales down 2%, we estimate the second quarter at $1.0 billion to $1.1 billion, which puts company-operated restaurants at 2.5% to 2.8% of the U.S. system, or at most about 3%. Treat that as approximate, because the 12% share is rounded and reflects full-year 2025.

Which Restaurant Count Is Right

Coca-Cola's release says the deal covers "all 3,600 KFC restaurants in the U.S." Reuters' first report on Oct. 15 put KFC's U.S. locations at 3,718, attributing that figure to KFC's website. Neither is a figure from a Yum filing, which gives a count for the whole KFC division (34,747 at June 30) but no U.S. only count that we could find. The 10-Q does say 90% of those units are outside the U.S. That implies roughly 3,300 to 3,650 U.S. restaurants, depending on rounding, by our approximate math. Coke's 3,600 fits that range, while 3,718 would be about 10.7% of the division and would imply 89% outside the U.S. The 3,600 appears rounded.

What It Means for PepsiCo and Coke

CNBC noted that Pepsi has supplied KFC's U.S. restaurants since PepsiCo bought the chain in 1986, and that Pepsi stays KFC's partner in international markets. Coca-Cola already serves McDonald's and Wendy's, Reuters said, while PepsiCo has Subway and Jersey Mike's. Coke has also won Culver's, Arby's and Panda Express in recent years, according to CNBC. TradeFlock looked earlier at Coca-Cola's push into automated dirty sodas and refreshers for chains like this one, and at KFC's Open House test restaurant in Texas, where KFC's release says the new drink lineup includes iced coffees, boba and shakes.

What to Watch

Yum's third quarter ended Sept. 30, before any Coke drinks reach a KFC counter, so its report cannot show whether the switch helps. The first test will come in the results covering early 2027. Watch whether KFC U.S. sales stop falling, and whether prices or the drink menu change when the Coke dispensers arrive.

Photo: Fried chicken by Brian Chan on Unsplash, used under the Unsplash License.