Start-up venture Wow! Momo is in talks with investors to raise Rs.50 crore for scaling up its operations. Its plans for the future include expansion to newer cities, Co-Founder and CEO Sagar Daryani said.

“We plan to raise Rs.50 crore between by March 2017, and we have already begun talks with investors,” he told. The 8-year old start-up raised Rs.10 crore in August 2015 in its first round of funding, to expand from 43 outlets to 96.

The company was valued at Rs.100 crore by the first-round investors. While Daryani was inspired by a Nepalese lady Denjee Bhutia selling momos to kids in school, it was the chicken or vegetable dumpling in the north-eastern snack food that helped him score. The chef then came out with momo-stuffed burgers, momo au-gratin, momo steaks, momo sizzlers and chocolate and brownie stuffed momos as desserts.

It is now present in eight cities including Kolkata, Bangalore, Chennai, Kochi, Pune,Delhi, Gurgaon and Noida. “We will enter Tier II cities next year beginning with Bhubaneswar,” he said.

Expansion plans

By 2021, 500 outlets are planned. This would include Mumbai, Hyderabad and Patna. “Chennai is our most profitable venture after Kolkata and we are planning an expansion”, he said. Wow! Momo started with a borrowed capital of Rs.30,000 by two college-friends Sagar Daryani and Binod Kumar Homagai .

It operates its quick service restaurants in four formats — kiosks, high-street mini, high-street maxi and in food courts in malls with rented space. It sells about 2.5 lakh pieces momos daily of which about one lakh are in Kolkata where it has 52 outlets.

“The capex varies between Rs.8 lakhs and Rs.40 lakhs” he said pointing out that all the outlets were on rentals. It also has a separate revenue-model through its delivery operations.

Saumyajit Guha , COO of Calcutta Angels Network, said that this company had shown how a successful business-model could be evolved out of branding and innovating a known, age-old product. He said that of the 12 start-ups funded by CAN, 10 were now in the revenue mode.

Analysts see the quick service restaurant industry facing rough weather in the medium-term triggered by rising competition from online players (Swiggy, Zomato) and private equity-funded food players. However, improvement in consumer sentiment in the next 2-3 years aided by a good monsoon and Seventh Pay Commission payout are anticipated to benefit QSR companies in the long-term. Innovations too will help some players stay ahead of competition, they said.

Source: The Hindu