KFC to Swap Pepsi for Coca-Cola at 3,700 US Locations Starting 2027

KFC will replace PepsiCo (PEP) beverages with Coca-Cola (KO) products across roughly 3,700 U.S. locations beginning January 2027, breaking a 40-year partnership, the chains announced last week. The conversion is expected to be completed by spring. TD Cowen analyst Robert Moskow estimated the deal adds only 0.1% to 0.2% to Coca-Cola's total revenue next year, but its strategic value outweighs the direct financial gain. Coca-Cola beverages are now served at more than 500,000 U.S. food-service outlets. The agreement follows Marriott International's (MAR) earlier switch from Pepsi to Coca-Cola. Coca-Cola is leveraging data and technology to entrench itself with restaurant operators. Its Freestyle machines generate consumer preference data used to develop exclusive drinks in as little as 90 days, versus a typical 18-month timeline. Its April "And a Coke" campaign partnered with 13 chains including Domino's (DPZ) and Wingstop (WING). PepsiCo is countering with its AI-driven Menu platform and recently won Subway's U.S. beverage business from Coca-Cola. Jefferies analyst Kaumil Gajrawala warned that rising competition could trigger a food-service price war, raising costs for both companies.