Why dog eat other dog waste?

Researchers at UC Berkley has this to say "Our conclusion is that eating of fresh stools is a reflection of an innate predisposition of ancestral canids living in nature that protects pack members from intestinal parasites present in feces that could occasionally be dropped in the den/rest area."

While it is repulsive to human sensibilities, it's not really all that bad from a canine point of view. Dogs evolved as scavengers, eating whatever they found on the ground or in the trash heap, so their ideas of haute cuisine is somewhat different from ours.