Wow Momo readies for international foray, plans 10-fold top line increase

Once rolled out, the frozen momo food category is expected to contribute 20% to its top line

Setting an ambitious target of earning Rs 500 crore revenue in the coming five years, Kolkata-based QSR (quick service restaurant) start-up Wow Momo, which aims to become a global brand, is readying plans for an international foray.

For the financial year ended March 31, 2016, the company registered a Rs 50 crore turnover.

Although primarily a QSR start-up selling fresh momos and other products from its outlets, the company isn't planning to open restaurants abroad in the very year of the global foray. Instead, it is working on a new product category — frozen momos — which it plans to sell in the US, Europe and the West Asia.

Once rolled out, the frozen momo food category is expected to contribute 20 per cent to its top line.

"Globally, the trend has shifted from junk foods to healthy foods and our product category is one that matches this global trend", Sagar Daryani, the start-up's co-founder and chief executive officer said, adding that momos in the international market will be an instant hit.

This initiative, as well as a planned domestic expansion, will need a fresh infusion of funds to the extent of Rs 50 crore. It has arranged the necessary funds by bringing in investors in a move that will dilute the founder's stake by another 15-18 per cent but is estimated to raise its enterprise valuation to Rs 300 crore from the current Rs 100 crore.

For the new product category, Wow Momo, has availed a bank loan to take land on lease in an industrial estate in Kolkata for a second five-storyied base kitchen that will primarily focus on freezing the momos, but will also make fresh steamed dumplings. The upcoming plant has a capacity to make 500 thousand momos a day.

Currently, Wow Momo sells more than 200 thousand momos daily.

The decision to go for an international venture stems from the company's success in Bangalore. Against the notion of momos being a popular quick food particularly with the Bengali, Tibetan and part of the North-Eastern populace, Daryani said, his company has received impressive uptake from a cosmopolitan population base.

Besides betting on product innovation to drive future sales, the company is also on a product diversification mode and plans to sell the sauces it uses to make the momos from modern retail channels. This venture will open a second revenue front for the company other than QSR.

With 108 outlets across India covering major metro cities and towns, Wow Momo is mulling entry into Mumbai, Hyderabad and other key markets that are expected to significantly contribute to its top line to achieve the Rs 500 crore target. Part of the second round of funds will also be used to fund its expansion which will also cover increasing its outlet count in Delhi NCR, Bangalore and West Bengal. It is also mulling outlet expansion into places of tourist interest.

In the coming five years, Wow Momo has set a target to open 500 outlets and plans to reach a 170-outlet count by the end of this calendar year.

Bootstrapped with only Rs 30,000 in 2008 by Sagar Daryani and Binod Homagai, both alumni of St. Xavier's College in Kolkata, Wow Momo received its first series of funding in 2015 from Sanjeev Bhikchandani of Naukri.com (Info Edge), Saurabh Srivastava, co-founder of Indian Angel Network and Ashvin Chadha, an angel investor.