Domino’s Pizza US executives have directly called out the chain’s struggling Australian offshoot, blaming its disastrous sales strategy for pulling down the fast-food giant’s global performance.In its second-quarter earnings presentation overnight, the US parent company revealed international comparable sales dropped by 0.1 per cent, with top bosses pointing the finger squarely at ASX-listed Domino’s Pizza Enterprises (DPE).DPE — which operates thousands of Domino’s outlets across Australia, New Zealand, Europe, and Japan — has been hit hard by a series of costly missteps.“Comp sales declined by 0.1 per cent in the quarter as they continued to be impacted by Domino’s Pizza Enterprises,” Domino’s US chief financial officer Sandeep Reddy told investors. “They remain focused on turning their business around. We continue to work closely with them on that.”He said the company as a whole was doing well in the US where it is aggressively trying to increase order counts and “disciplined pricing”.“Since I joined the company at the end of 2008, we have more than doubled the number of orders coming through our system in the US,” he said.“This growth in transactions helped drive approximately $7 billion in additional retail sales, more than 2,100 net new stores and nearly 240 per cent increase in store level earnings for franchisees. “Put simply, more orders and disciplined pricing have led to more sales, more stores and more profits. This formula has helped make Domino’s the number one pizza company in the world, and our growth opportunity remains substantial. “With roughly 23 per cent share of the pizza category, we still have significant runway ahead of us compared with leading QSR brands in other categories that command a 40 to 50 per cent market share.”Why Australia was called out After touting its success, US management outlined exactly where the Aussie-led operation went wrong.In a bid to protect profit margins against rising inflation, DPE intentionally cut back on lower-margin discount promotions. However, the tactic backfired. Instead of driving bigger profits, it killed off customer order volumes entirely.DPE’s share price has dramatically collapsed by almost 90 per cent since its all-time high in September 2021.Outgoing US Chief Executive Officer Russell Weiner noted that while DPE tried to reset its profit numbers, it sacrificed the single most critical driver of fast-food success — order counts.“There’s been an initial kind of reboot on the profit side at the expense of orders,” Mr Weiner said. “We think — I think they think as well — now we need to go in with the right kind of value to recapture order counts.”Mr Reddy said DPE was “definitely a drag on our same-store sales”.“This is because their performance continued to be impacted by the approach that their management have already talked about, which is they’ve actively decided to actually reduce the lower margin transactions,” Mr Reddy said.“As a result of that, they’ve actually had a reduction in order counts where the ticket increase has not been able to compensate it. That same-store sales drag that they’ve experienced impacts us pretty materially. That’s the other driver that I would say is embedded in the numbers.”US bosses stepping in The US parent company confirmed it is working closely with incoming DPE chief executive Andrew Gregory — a fast-food veteran with three decades of experience — to course-correct the business. He will start in August.“Their new CEO, Andrew Gregory, is going to be starting in August, we’re really looking forward to working with Andrew,” Mr Weiner said. “He’s got 30 years in the restaurant business, majority of those with McDonald’s.“What we’re going to be focusing on is, like Sandeep said, there’s been an initial kind of reboot on the profit side at the expense of orders. We think, I think they think as well, now we need to go in with the right kind of value to recapture order counts.Despite the recent slump, US leadership said the Australian market remains fundamentally strong.“It’s important for folks to remember that with Domino’s Pizza Enterprises … they are the number one pizza player in the majority of their markets,” Mr Weiner said. “So they’re coming back from a position of strength.”With new leadership taking the reins at DPE, the US headquarters is expecting an aggressive return to value-focused deals down under to entice budget-conscious Aussie pizza lovers back through the door.DPE is currently led by its chairman and major shareholder, Hungry Jack’s founder Jack Cowin.In July last year, Mr Cowin told The Australian he was in constant contact with his counterpart at the US Domino’s as he leads a strategy and operational refresh.“We talk to them all the time, we spoke just a couple of days ago and they are very supportive of what we are doing,” Mr Cowin said.“They don’t have to ask, they know. There are no secrets on this business, we communicate and we send them a monthly cheque, so they have a deep-seated interest in what is going on.”Pizza the biggest loser in Aussie fast food revolutionDPE’s troubles come as Australia’s $30 billion fast food industry is undergoing a seismic shake-up, as its biggest players radically alter menus to meet changing tastes — leaving some traditional Aussie favourites out in the cold.This week, it was revealed that KFC would be muscling in on the breakfast space and expanding hours to meet the rising demand from shift workers and Gen Z.Other major brands like McDonald’s are experimenting with new technology and becoming data-driven to make more money as households feel the squeeze of persistent economic pressures.It’s a squeeze that Joshua Campbell, a senior analyst at IBISWorld, said is piling immense pressure on an industry that is seeing the second worst rate of collapses, behind only the construction industry.As a result, he told news.com.au the current high-inflation environment has triggered a clear divide in what Australians are choosing to put on their plates.One of the biggest winners was chicken-based dishes, while pizza was one of the biggest losers.“Brands are really leaning into chicken’s reputation as lean, high-protein and as an alternative to red meat,” he said. “KFC, Oporto and Nando’s are all brands that have expanded into real chicken, tender chicken and wrap formats for people who want something quick but don’t want something heavy or fried.“By contrast, pizza’s share has been under pressure. In the high-inflation environment that we have at the moment, a whole pizza can sometimes be expensive for a smaller household compared with burgers or chicken. And sometimes the supermarket ready meals or their ready pizzas can be a cheaper alternative to what a traditional pizza can be.”He said Domino’s reported a small after-tax loss in their 2025 financial year that showed how challenging the pizza space is right now. “It was their worst in over 20 years,” he said. “And that was the strategy, deliberately pulling back on big discounting to try to rebuild their franchise market.”The great ‘trade down’This reshuffling of the menu is the direct result of a broader economic pivot in Australia. While Aussies haven’t stopped eating out altogether, the escalating cost of living has fundamentally altered where and how they spend their discretionary dollars.“Cost of living pressures have not necessarily stopped Australians from eating out, but they’ve definitely changed where and how they’re spending their money,” he said. “They’ve traded down from restaurants to fast food, and they’re doing it more specifically with a focus on value.“Interest rates, rents and grocery bills have all been climbing significantly, so many households have pivoted away from those higher-priced restaurants towards quick service restaurants where that total bill is a little bit lower.”He said that over the last five years, revenues for fast food and takeaway services have grown at about 1.4 per cent a year, sitting at just under $30 billion in 2025-26. “So it’s not a big boom story, it’s more about the mix behind how that growth has come,” he said.“ABS retail data has shown that cafes, restaurants and takeaway spending has rebounded, so consumers are chasing far more bundle values and menus at a lower level. So they’re lifting transaction volumes, but the average spend is down.”