KFC Switches US Fountain Drinks From Pepsi to Coca-Cola in 3,000+ Restaurants

what happened

According to the Wall Street Journal, KFC in the United States has picked Coca-Cola to supply fountain beverages at more than 3,000 restaurants, replacing Pepsi, whose decade-long contract is nearing its end. The decision followed a second competition in June, in which both companies pitched to KFC executives and franchisees at Yum's headquarters.

Pepsi owns the fountains in KFC kitchens and dining rooms, so they must be removed and swapped for Coca-Cola equipment. Equipment changes are scheduled for January through April. Franchisees are waiting for details on syrup costs and the rebates Coca-Cola will offer.

why it matters

The deal matters for Pepsi, whose beverage business has been slowing, and for Coca-Cola, which is expanding its food-service footprint. For KFC, whose US sales have weakened, drinks are seen as a way to lift franchisee profits.

market impact

Pepsi: loss of a major fast-food client pressures its fountain drinks business; Coca-Cola: gains share in food service

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