Customers who prefer a Pepsi with their footlong are finally in luck.
Subway on Tuesday announced that it has reached a 10-year deal with PepsiCo, a rare shift in beverage providers among one of the country’s largest restaurant chains.
U.S. locations will start serving Pepsi products on Jan. 1, 2025, the company said, with the rollout taking place over several months. The deal brings Subway’s beverage and snack portfolio under a single provider, which Subway said will be more efficient.
PepsiCo’s beverage portfolio includes Pepsi, Pepsi Zero Sugar, Mtn Dew, Starry, Tropicana, Lipton, Aquafina and Gatorade. Franchisees of Subway’s 20,000 U.S. locations will have the option to offer a larger selection of Gatorade beverages.
Doug Fry, president of Subway North America, called the deal “a win-win for everyone,” saying that “it brings a delicious suite of beverage and snack choices to our guests, driving additional consideration of these menu items, while also providing cost-effective, streamlined solutions to our franchisees.”
For Subway and its operators, the efficiency question matters because keeping costs down can help franchisees improve profitability, which is important for a chain that has continued to cull restaurants domestically.
Subway has closed about 7,000 locations in the U.S. since 2015.
The company has made numerous changes to its business over the past four years, from making several menu upgrades, adding slicers and improving its marketing. It’s all in a bid to improve sales and unit economics.
Yet switching beverage contracts is relatively rare, at least among the very biggest chains. The last time a chain among the 20 largest U.S. restaurant contracts switched beverage providers was in 2018, when Arby’s jumped from Pepsi to Coke.
Last year, the Wisconsin-based burger chain Culver’s also switched from Pepsi to Coke.
Pepsi is already the beverage provider for Subway in various markets across the world, including Canada, Germany, Nordic countries and the Netherlands. And Subway already offers customers a selection of chips and other snack products from PepsiCo’s Frito-Lay subsidiary.
“Together, we’re elevating the consumer experience with dynamic beverage and snack offerings, including those that appeal to a broad spectrum of customers,” Anne Fink, president, PepsiCo Global Foodservice, said in a statement.
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