KFC International renews Pepsi partnership across eight markets

KFC International operates about 35,000 restaurants, and PepsiCo has renewed its beverage partnership across eight KFC markets. KFC International represents approximately 90% of the KFC business. The unit is one of Yum Brands’ “twin growth engines.”

The renewal covers:

• Australia
• India
• The United Kingdom
• Spain
• Germany
• France
• The Netherlands
• Belgium

PepsiCo remains the beverage partner of choice in these markets. The agreement also builds on a decades-long global partnership spanning the Middle East, Europe, Asia-Pacific, Latin America and other markets already serving PepsiCo brands and products.

What changed?

The renewal arrives less than one month after KFC U.S. switched from Pepsi to Coca-Cola, ending Pepsi’s 40-year run as the exclusive U.S. beverage partner. The result is a geographic split. Pepsi retains the international agreement, while the U.S. operation now uses Coca-Cola.

The announcement disclosed no contract value, beverage revenue share, pricing terms or margin impact. It also did not specify how many participating restaurants are company-operated or franchised. Those omissions limit any estimate of unit-level economics.

How will the beverage program work?

PepsiCo and KFC will work together to create beverages and menu offerings tailored for local markets. The stated aims are to drive traffic and expand dining occasions. Pepsi will also support KFC’s continued beverage expansion worldwide, with a goal of meeting increasing demand, particularly from Gen Z consumers.

“As consumer tastes continue to evolve, PepsiCo is moving at the speed of culture, bringing new capabilities and category-leading innovation, to help KFC build a more modern, distinctive, and relevant beverage business around the world,” said Eugene Willemsen, PepsiCo’s CEO of International Beverages.

“We are proud of our longstanding partnership with KFC and look forward to continuing to build on that strong foundation together,” Willemsen said.

What is the operating backdrop?

Technomic’s Top 500 summary describes another tough year for chain restaurants, with sales slowing again in 2025 as consumers cut back on dining. Coffee, beverages, snacks and chicken were among the sectors that thrived.

For KFC, the relative strength of beverages and chicken supports a traffic-led extension strategy built around localized drinks and menu items. The announcement offers no check average, same-store sales figure, price change, gross-margin forecast, cost-of-goods ratio or labor percentage. Any near-term earnings estimate would depend on assumptions beyond the release.

How long is Pepsi’s foothold?

PepsiCo bought KFC in 1986 and made Pepsi the exclusive beverage partner for U.S. locations. When PepsiCo spun KFC off into Yum Brands in 1997, the partnership continued. Corporate separation did not sever the commercial tie.

Two weeks before the KFC International announcement, sibling brand Taco Bell extended its PepsiCo partnership through 2036. That longer-dated commitment contrasts with the KFC renewal, for which the announcement gives no expiration date.

What should operators watch?

For company-operated restaurants and franchisees, the practical test is whether locally developed drinks lift traffic, dining occasions and check averages. Any margin benefit will depend on beverage mix, pricing and supplier terms, none of which the announcement quantifies. Because it does not separate company-operated from franchised units, the release leaves operator-level economics unresolved.

The forward test is straightforward: local beverage launches must convert Gen Z demand into more traffic and occasions without sacrificing margins. Until operators report those results, the renewal is a strategic signal, not a quantified earnings story.