Pepsi used to own KFC. Now KFC is pouring Coke instead

KFC is switching from Pepsi to Coca-Cola at every one of its 3,700 US restaurants, ending a run that lasted 40 years. The chain made the move because Coca-Cola now sells far more soda in America than Pepsi does.

The new drinks start arriving in January 2027 and reach every US store by spring, Fortune reported on 25 October 2026. It closes a relationship that began when PepsiCo did not just supply KFC's fountain machines. PepsiCo owned KFC.

From 1986 to 1997, Kentucky Fried Chicken was a PepsiCo company. So were Pizza Hut and Taco Bell. All three sat in the same boardroom as Pepsi-Cola itself, run by the same bosses who decided what Americans would drink with their fried chicken.

Which fast food chains pour Pepsi, and which pour Coke?

Here is the full picture of America's biggest pouring-rights accounts, who holds each one now, and when the deal last changed hands.

Taco Bell is the detail that stings the most. Pepsi and Yum Brands quietly locked that deal in for another decade just days after the KFC news broke, so Pepsi did not lose the whole group it used to own. It lost the one chain carrying the name that started this story.

These accounts move more than people think. Burger King actually poured Pepsi from 1983 to 1990 before switching back to Coca-Cola, and PepsiCo lost Dunkin' to Coca-Cola in 2012 after only five years as its supplier. A soda contract at a chain with thousands of stores can flip a company's fortunes overnight, which is exactly why PepsiCo is so rattled by losing KFC now.

Why did Pepsi used to own KFC, Pizza Hut and Taco Bell?

PepsiCo bought Pizza Hut in 1977, Taco Bell in 1978 and KFC in 1986. The plan was to spread beyond soda and chips into fast food, stacking three huge restaurant brands under one parent company.

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It worked, for a while. By the mid-1990s the three chains ran close to 29,000 restaurants in 95 countries, more locations than Pepsi's own drinks business served directly.

Then, on 6 October 1997, PepsiCo cut the three chains loose. Shareholders got one share in a new company, Tricon Global Restaurants, for every ten PepsiCo shares they held. Tricon later renamed itself Yum! Brands, the name it still trades under today.

Why did owning its own restaurants cost Pepsi the restaurants?

PepsiCo's chairman at the time, Roger Enrico, gave the official reason: Restaurants and packaged goods had "distinctly different dynamics" and would grow faster apart. KFC's US sales were sluggish, franchisees were unhappy, and the chains were not earning the returns Pepsi's drinks and snacks did.

But there was a second problem that money alone does not explain. While Pepsi owned KFC, Pizza Hut and Taco Bell, every rival chain Pepsi wanted to sell cola to, Wendy's, Burger King, Hardee's, was being asked to hand its drink money to a company that also ran a competing restaurant down the road. Marketing courses still point to Pepsi's old setup as a textbook case of that exact bind. No chain wants its soda supplier to also be chasing its customers.

Cutting the restaurants loose let Pepsi go back to selling cola to Wendy's and Burger King without looking like the enemy. It is the reason KFC, Pizza Hut and Taco Bell exist today as a separate company at all.

Photo: Maksym Kozlenko / Wikimedia Commons, CC BY-SA 4.0

How far has Pepsi fallen behind Coke?

Pepsi-Cola held just 8.1% of the US fizzy drinks market by volume last year. Coca-Cola held 18.5%, more than double. In 2024, Pepsi slipped to third place in US cola sales for the first time ever, behind Dr Pepper, and it has stayed there since.

PepsiCo's own chief executive, Ramon Laguarta, admitted how bad it looks this month. "We do not feel good about the beverage business," he said. "So we are putting all the urgency of the business and focus on improving our performance in soft drinks."

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Diet Coke and Coke Zero alone now outsell their closest Pepsi equivalents by several times over, Fortune reported, a gap that did not exist a generation ago.

What does losing KFC actually cost PepsiCo?

Wall Street puts the direct hit at around $50 million in lost wholesale revenue a year, with the knock-on retail sales swing closer to $350 million to $400 million, according to Evercore ISI analyst Robert Ottenstein. Small next to PepsiCo's roughly $94 billion in yearly revenue, 58% of which comes from Frito-Lay chips and 30% from North American drinks, but big enough to sting a brand that is already losing ground.

Photo: Rowanswiki / Wikimedia Commons, CC0

Coca-Cola, by contrast, reported $47.9 billion in revenue for 2025, roughly half of PepsiCo's total. Coke sells far less in chips and snacks, but it is comfortably winning the one fight that carries its name.

PepsiCo is also fending off activist investor Elliott Management, which built a stake worth about $4 billion in the company and called it a "dramatic underperformer." PepsiCo has since agreed to cut its US product lineup by a fifth and close plants, the kind of cost-cutting playbook that has also hit staff at companies like Netflix this year. Porsche has reached for a similar fix from the other direction, choosing to build fewer models rather than chase every market, to protect what it earns on each car it still sells.

Did Pepsi lose everything, or just KFC?

Just KFC, for now. Pizza Hut has poured Pepsi since 2011, years before any of this, and it is no longer even part of Yum Brands, having been sold off to a private equity buyer earlier in 2026. Taco Bell signed on for another ten years the same month KFC walked out.

Coca-Cola's own bottling and supply chain problems have shown up elsewhere too. A Coca-Cola bottler in South Africa recently admitted to losing nearly half its water to leaks, a reminder that even the winning side is not running a clean operation behind the scenes.

The restaurants PepsiCo gave up in 1997 to save its drinks business are worth roughly $40 billion as Yum Brands today, nearly half of what PepsiCo itself is worth. Twenty-nine years after the split, the one chain Pepsi fought hardest to keep pouring its cola into just walked out the door anyway, straight into Coca-Cola's.