This article first appeared on GuruFocus.

Domino's Pizza Enterprises (DMZPY) is attempting a strategic reset under billionaire chairman Jack Cowin, who took control last July and began unwinding a growth-at-any-cost strategy that had weighed on earnings and pressured the company's share price. Cowin is shifting the business away from heavy discounting and voucher-driven promotions toward a simpler menu with higher-priced pizzas, a move he believes could generate more profitable sales for franchisees. In an interview in Sydney, Cowin said same-store sales in Australia had been growing in the two weeks since the company's most recent update on Feb. 25, while international markets including Germany, France and Japan remain at different stages of the broader turnaround.

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The shift represents a sharp break from Domino's earlier playbook, which emphasized rapid store expansion and aggressive promotions to drive volume. Cowin said a pricing trial at stores in Western Australia suggested roughly 10% of customers mainly those highly sensitive to price stopped buying pizzas after the new model was introduced, though profits at those locations increased. The turnaround also includes plans to remove about A$100 million in food, technology and other costs from the business, while encouraging a more profitable sales mix for franchise operators. Company filings show a typical Domino's franchisee earned about A$103,000 per store last year, up from A$99,000 the year before but still below the A$163,000 reported during the pandemic in 2021.

Investors, however, appear to be waiting for clearer evidence that the strategy can translate into stronger operating momentum. Domino's shares have fallen almost 90% from their 2021 peak, and the stock dropped 11% on Feb. 25 after the company said same-store sales declined 7.2% in the first eight weeks of the year. Since Cowin stepped in as executive chairman, the shares have slipped about 10%, leaving the company valued near A$1.7 billion. Rising interest rates, cost-of-living pressures and growing competition across Australia's fast-food market could continue to shape demand, while data compiled by Bloomberg shows about 22% of Domino's free float is currently sold short.

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