How Wow Momo's built a 2000 crore brand

Wow! Momo Foods, the company behind brands Wow! Momo, Wow! Chicken, and Wow! China, just raised a whopping $42 million from Khazanah Nasional Berhad, Malaysia’s sovereign wealth fund.

Not just that its previous investors OAKS Asset Management invested an extra $7 million. This financial boost came at a crucial time as the company aimed to surpass Rs 500 crore in revenue for the fiscal year 2024 and was planning to expand into Southeast Asia and the Gulf Cooperation Council (GCC).

The growth of the company came on the back of the Indian quick-service restaurant industry which is gearing up for substantial growth, expecting a 20-25% Year-over-Year (YoY) upswing in FY24.

As Wow! Momo targets a revenue exceeding Rs 500 crore in the current fiscal year, the Momo quick-service chain business is expected to bring in a revenue between Rs 490 crore and Rs 500 crore. 

Additionally, its Fast-Moving Consumer Goods (FMCG) vertical, which include frozen snacks, is expected to generate approximately Rs 20-25 crore in revenue’
Now, let’s take a glance back into history and understand how a small momo shop transformed into a 2000 crore start-up!

Founded in 2008 by Sagar Daryani and Binod Homagai, Wow! has raised over $78 million in funding till date. Its early investors, including Tiger Global and Value Quest Capital, played a crucial role in steering the company's growth trajectory.

Wow! Momo's success is deeply rooted in its founders' passion for street food, particularly momos.
Sagar Daryani and Binod Homagai started the business during their college years. They started with a small kiosk in Kolkata and then went to expand and grow to hundreds of stores. The company, currently valued in the billions, has transformed into a major player in the food industry.
Despite facing family opposition, both the founders were persistent on starting a food business. They started the business with a meager investment of Rs 30,000, one table, and two part-time cooks. 

Over the years, Wow! Momo became synonymous with experimentation. They introduced fusion foods and unique products like the 'Moburg,' which is a fusion of a momo and a burger.
As of February 2024, Wow! Momo boasts an extensive presence with 630 outlets across 35 Indian cities, operating under three brands: Wow! Momo, Wow! China, and Wow! Chicken.
The company plans to go public and aims to compete globally with giants like Domino’s and McDonald’s.

Now, let’s delve into the Wow! Momo Strategy: Challenging Convention in a Franchise-Driven Landscape

Wow! Momo's journey from a small start to a significant quick-service restaurant (QSR) empire is not just about financial success; it's also marked by a unique business strategy that challenges the norms in the fast-food industry.

In contrast to global fast-food chains that often resort to the franchise model to grow quickly, Wow! Momo has taken a different route by choosing to take the ownership and direct control of all its 630 outlets, including Wow! Momo, Wow! China, and Wow! Chicken.

Daryani's beliefs that the food and beverage (F&B) industry is a mix of commodity and service, operates more efficiently without the franchising model. 

He argues that the nature of F&B, especially in preparing items like burgers and pizzas, requires strict adherence to standard operating procedures (SOPs) and consistency in quality, which is better managed by a large corporate entity with a robust learning and development team.

Consistency as a Branding Strategy:

Wow! Momo's ownership strategy is centered around prioritizing consistency as a cornerstone of its brand. Daryani draws parallels with global giants like Domino's, highlighting the importance of maintaining a consistent experience in the QSR sector. By directly managing all outlets, Wow! Momo ensures control and maintains quality and service standards across its diverse locations.

Brand Integrity and Upside vs. Downside:

Daryani acknowledges that the franchise model might have yielded better margins, possibly reaching 14-15% EBITDA compared to the current 10%. However, he argues that the entire setup, including operational managers, cluster managers, and restaurant managers, is crucial to facilitate the brand's rapid growth and ensure consistent quality. The downside of franchising, he believes, could have negatively impacted brand goodwill if poorly performing stores were closed down by franchisees.

Brand Building and Future Expansion:

As Wow! Momo looks towards global expansion into Southeast Asia, GCC nations, and Bangladesh, its unique ownership strategy becomes a key differentiator. The company's approach to owning and operating stores has allowed it to build a robust brand presence, characterized by a commitment to consistency, innovation, and an extensive menu.

Facing Challenges: Adapting and Thriving

The journey for Wow! Momo wasn't always smooth. In the early months of FY24, the company witnessed a slowdown in consumption. 

The same-store sales growth, a measure of total sales from a store operational for over a year, dipped to negative 2-3% in the first two quarters of FY24, signaling a change in consumer behavior. 

In response, the company opted to open fewer stores during this period, acknowledging the dip in demand.

Despite these challenges, Wow! Momo managed to sustain its "excellent" gross margins, even after the increase in the food prices. 

Global Ambitions: Wow! Momo's Culinary Expedition Beyond Borders

After conquering the Indian market with 630 outlets across 35 cities, Wow! Momo is now eyeing global expansion. The recent $42 million investment from Malaysia's Khazanah Nasional Berhad would boost their  ambitious expansion plan.  

In the next three to five years, the company plans to go global and expand in Southeast Asia, GCC nations, and Bangladesh.

The company wants to go beyond momos; Wow! Momo plans to diversify its offerings by introducing Wow! Kulfi for dessert and expanding its frozen food portfolio with additional snacks. 

In Conclusion: The Recipe for Success

As they plan to expand the brand globally, the brand's commitment to consistency, quality, and self-sufficiency would position them as a formidable player in the fast food industry. 
Wow! Momo's story goes beyond momos; it's a flavorful tale of ambition, taste, and the courage to challenge the norms in the culinary industry. As they continue to spice up the food industry, the world eagerly awaits the next chapter in Wow! Momo's epic journey.