Papa John’s Pizza will end its exclusive 25-year relationship with Coca-Cola and start serving Pepsi in its U.S. stores, beginning in January.
The switch by the Louisville-based restaurant chain is a blow to Coke in the competition between the nation’s two beverage giants in their efforts to advance their fountain-restaurant businesses. The companies have worked diligently to secure exclusive contracts with several restaurants: Pepsi also has Pizza Hut, Taco Bell and KFC; Coke is aligned with McDonald’s, Subway and Wendy’s.
A Papa John’s spokesman said the new beverage agreement with Pepsi resulted from the compatibility of the companies. However, the pizza chain didn’t spell out the reason for its break-up with Coke that comes at the end of its long relationship, most recently a seven-year contract.
“Our contract with Coke was set to expire and, as we reviewed what we were going to do in a new contract, Pepsi earned our business; it was just a better fit,” spokesman Chris Sternberg said.
Atlanta-based Coca-Cola wouldn’t weigh in on the loss of Papa John’s. “We don’t comment about the nature of our customer partnerships,” spokesman Scott Williamson said.
Pepsi, in a statement, likewise cited a compatibility between itself and Papa John’s.
“Culturally, the companies are a great fit, and we’re confident PepsiCo’s customized marketing support, deep consumer insights and broad, guest-relevant portfolio will deliver a win for the entire Papa John’s brand,” Stacy Reichert, senior vice president and chief customer officer for PepsiCo’s Foodservice division, said in the statement.
Coke dominates the restaurant business, or fountain segment, with an estimated 72 percent of the North American market, said John Sicher, publisher of Beverage Digest, which first reported the Papa John’s beverage changeover on Thursday.
“Coke and Pepsi are quite close in the retail store part of the business,” Sicher said. “Coke has a big lead in the restaurants business.”
The loss of Papa John’s shouldn’t have a huge impact on Coke’s bottom line, Sicher said. Coke sells about 6 million cases of volume per year to Papa Johns, a fraction of its overall volume of 5 billion cases annually.
Karen Bremer, executive director of the Georgia Restaurant Association, said Papa John’s might feel more of an impact than Coke.
“This is where you have to decide whether the loyalty is to the pizza or to the beverage,” she said.
