KFC Drops Pepsi After 40 Years as Beverage Strategy Reshapes Yum

KFC U.S. will pour Coca-Cola products for the first time in four decades, ending a 40-year relationship with Pepsi and executing one of the rarest moves available to a chain of its scale: a full beverage-supplier switch.

NRN editor in chief Sam Oches and executive editor Alicia Kelso examined the decision this week on the Extra Serving podcast. They framed it as more than a supplier dispute. A switch of this magnitude, they argued, signals where KFC believes beverage innovation must go next.

The company has not disclosed financial terms. Until it does, observers cannot judge whether the deal improves KFC's pour costs or simply rebrands its cups.

Where does Taco Bell fit in the beverage push?

The same parent, Yum Brands, is pushing drinks from another angle. Taco Bell announced it will expand its beverage-forward Live Mas Cafe concept into the Midwest. It also confirmed four new horchata products for the menu.

The two moves are related in intent, if not in structure. KFC changed suppliers. Taco Bell is building demand through menu engineering and format. Both brands treat beverages as a growth lever rather than an accessory.

Oches and Kelso noted Taco Bell is unusually well positioned to capture consumer demand for new drinks. Whether horchata translates beyond core customers remains an open question that the Midwest expansion will test.

What went wrong at Domino's?

Domino's Pizza reported same-store sales growth of just 0.3% in Q3. That figure landed despite the launch of the Domino, a single-serve pizza the company ranked among the biggest innovations in its history.

The gap between the product's billing and its sales impact is the story. A headline innovation that moves same-store sales by a fraction of a percent suggests the problem sits elsewhere — with the consumer, not the menu.

Kelso and Oches pointed to Domino's heavy reliance on promotions and discounts as a structural risk. Discounting can protect traffic in the short term. Sustained too long, it trains customers to wait for deals and erodes the pricing power that fuels margin recovery.

What does the Top 500 data show?

The Technomic Top 500 provides the backdrop. Chain restaurant sales slowed again in 2025 as consumers pulled back on dining out. Not every category suffered equally.

• Coffee, beverages and snacks posted growth.
• Chicken chains also thrived.
• The broader full-service and fast-food middle absorbed the slowdown.

That split explains the week's news. The winning categories are beverage-dense and protein-forward. KFC sits in a strong protein segment and still chose to rebuild its beverage line. Domino's sits outside both growth poles and is paying for it.

Who else appears in the conversation?

Senior food and beverage editor Bret Thorn spoke with Courtney Bufford-Hughes, director of culinary innovation for Edible Brands. The company owns Rōti Mediterranean Grill and Edible Arrangements. The discussion covered product development across that dual portfolio.

The contrast is instructive. Edible Brands is innovating across fresh fruit gifting and fast-casual Mediterranean under one roof, while the largest chains negotiate syrup contracts.

What comes next?

Watch for Coca-Cola's first KFC menu appearances and the Midwest Live Mas Cafe results. Both will show whether Yum's beverage bet produces measurable traffic, or whether the drinks story stays louder than the sales line.

By Marcus Bennett, The Pass Brief