Wendy’s Decides Coke’s the One, Dumps Pepsi

Wendy’s International, the nation’s third-largest hamburger chain, said Wednesday that it plans to drop Pepsi-Cola from the menu at its 1,212 company-owned outlets in favor of Coca-Cola due to Pepsico’s increasing prominence as an operator of fast-food restaurants.

Wendy’s, which ranks behind McDonald’s and Burger King, also said it would urge its 2,270 U.S. franchisees to make the switch. (Under the company’s agreements, franchises can serve what they choose.)

The outlets will make the switch over the next two months, said officials of Wendy’s, which is based in suburban Dublin, Ohio. Wendy’s has served Pepsi-Cola since opening its first restaurant in 1969.

Pepsico, based in Purchase, N.Y., has operated Pizza Hut and Taco Bell restaurants for several years. But Robert L. Barney, Wendy’s chairman and chief executive, said Pepsico “went one step too far” last summer in buying the Kentucky Fried Chicken chain of 6,500 fast-food restaurants. That $850-million acquisition made Pepsico the world’s largest fast-food chain in terms of number of restaurants, with more than 14,000 outlets.

“Their interests are now in conflict with a Wendy’s, and we will not support a company that is trying to make our customers its customers,” Barney said.

Pepsi-Cola spokesman Stuart Ross disputed that assertion. “If you want to talk about competition, Wendy’s real competition is McDonald’s and Coke,” he said, adding that Pepsi’s largest restaurant account is Pillsbury-owned Burger King.

In recent months, Coca-Cola Co. has aggressively sought to woo new restaurant accounts from fast-food operators by arguing that by serving Pepsi they help finance their own competition. Although several analysts believe that Coca-Cola has made some inroads with that argument, they said it is unlikely to cause Pepsico to retreat from its expansion into the restaurant business.

“There’s no turning back for Pepsi,” said Andres S. Christon, a principal of Ippolito Christon & Co., an Atlanta-based financial consulting firm. “Their strategy is committed to the food-service industry, which is eight times larger than soft drinks.”

Sales to all of Wendy’s restaurants, including franchises, represent less than 1% of Pepsico’s domestic soft-drink volume, Pepsi officials said.