Wow! Momo Eyes Rs 1,000-Crore Top Line By FY27, To Add 15 Stores A Month

Wow! Momo Foods Pvt. is on an expansion spree, with plans to open 15 new stores every month in a bid to achieve a turnover of Rs 1,000 crore by financial year 2027.

"After a decline in same-store sales in the last two consecutive quarters, growth has returned to positive territory," Chief Executive Officer Sagar Daryani told NDTV Profit on the sidelines of an event in New Delhi on Tuesday. "We want to get to Rs 1,000-crore top line with (a) 10% Ebitda margin and be profitable in 30 months' time. That's the goal."

By the end of this fiscal, Wow! Momo plans to open 200 stores in 60 cities. The Kolkata-based company, known for its momo and other quick bites, currently operates 580 outlets in 42 cities.

One factor fuelling demand is the rising cost of cooking at home in comparison to eating out, according to the co-founder.

Prices of tomatoes, onions and potatoes — staples in every kitchen — surged by double digits in June as extreme heat and heavy floods in northern states damaged crops, causing lower production. There has also been a sharp spike in prices of other essentials like milk, poultry, cereals and pulses. Consumer sentiment has also worsened in recent months. But most fast-food restaurants, including Wow Momo!, are not relying primarily on price increases, but are looking for other ways to offset inflation.

"While these costs are hurting us as well, we aren't passing them on to customers," Daryani said. "It's been more than a year now since we have raised menu prices."

"We don't believe in deep discounting either. Instead, we're working on building efficiencies and cost savings in terms of increased automation to bring down staff costs, lower rentals, etc. to maintain profit margins," he said.

Comparing the current inflationary scenario to that of the past, he said that the volatility is manageable. "At least we can now forecast the trend and respond to it, unlike the last two years when prices touched unprecedented highs."

The fast-food restaurant chain scaled nearly four times as its revenue zoomed to Rs 413 crore in fiscal 2023 from Rs 106 crore in 2020–21, according to its regulatory filings. In the last fiscal, the company's revenue exceeded Rs 475 crore and it is aiming to achieve a revenue of Rs 600 crore in the current fiscal.

In March, Wow! Momo raised Rs 70 crore from Z3Partners as part of an extended Series D round. Since its launch in 2008, the company has raised external funding totalling over Rs 625 crore. It counts the likes of Tiger Global Management and Lighthouse Funds among its backers.

The company operates under three separate brands, including Wow! Momo, Wow! China and Wow! Chicken. It has a considerable presence in the fast-moving consumer goods sector. The funding would help the brand to strengthen distribution foothold as well as research and development capabilities of the packaged goods business.

India's food services market is estimated at Rs 5.7 lakh crore, with organised QSR chains valued at Rs 67,560 crore. The market is estimated to grow 8.1% annually to reach Rs 7.8 lakh crore by 2028. Overall, the average monthly eating-out frequency, including dine-in and delivery, has increased to 7.9 times in 2023–24 from 6.6 times in 2018–19, according to a report by the National Restaurant Association of India.

Despite a broader weak demand across the QSR sector, Daryani is bullish about the medium-term outlook and plans to keep investing in store expansion. Things are now improving, with political stability and improving macroeconomic conditions aiding consumer spending, albeit at a slow pace, he said.

A likely pro-consumption budget will further provide a boost. "We expect the upcoming budget to focus on boosting consumption by way of putting more money into the hands of the people," Daryani said.

Wow! Momo is also planning to launch glutten-free momo within the next two–three months in response to an increasing consumer demand for healthier food choices. "Steam momos are healthy but glutten-free, or diet momo as we call it, will be healthier. People will no longer feel guilty about eating out," he said.