Wow! Momo Foods expects FY24 revenue to cross Rs 500 Cr, eyes Southeast Asia, GCC entry

Amid the tough macroeconomic situation, it’s rare to hear of a quick-service restaurant securing a big cheque in venture capital funding.

But Delhi-based Wow! Momo Foods—the operator of Wow! Momo, Wow! Chicken, and Wow! China—has done it by raising a whopping $42 million from Khazanah Nasional Berhad, Malaysia’s sovereign wealth fund. Existing investors OAKS Asset Management pumped in an additional $7 million.

The funding has arrived at an opportune time—when the company expects its FY24 revenue to cross Rs 500 crore and aims to carve a presence in Southeast Asia and GCC (Gulf Cooperation Council).

“There’s a special kind of validation when a sovereign fund backs your firm. We’re obviously doing many things right,” Sagar Daryani, Co-founder and CEO of Wow! Momo Foods, told YourStory.

Support from a sovereign fund comes with certain advantages—a longer shelf life and a relatively low rush for a fruitful exit, according to Daryani. Moreover, Khazanah’s success in other India investments, including logistics firm Xpressbees, women’s apparel brand Zivame, and ecommerce behemoth Flipkart, adds credibility, he remarked.

“Out of all the funds we were in talks with, Khazanah came through the fastest. We were also particular about choosing a partner with the right mindset to raise money at the right valuation,” said Daryani, adding that raising capital from a selective fund could be challenging yet highly rewarding.

The Malaysian sovereign fund has a strong portfolio in Southeast Asia with significant investments in the sectors of food, healthcare, and consumer internet. In 2022, nearly 10% of Khazanah’s investments were made in Asia, excluding China.

“Khazanah’s extensive portfolio of food businesses in Malaysia and the US shows their comprehensive understanding of the space," said the CEO.

Moreover, interest from new investors has helped Wow! give its early backers, such as Lighthouse Funds and Indian Angel Network, a partial exit with handsome returns, said Daryani, adding that it is likely to boost the sentiment in the foodtech sector.

Founded in 2008 by Daryani and Binod Homagai, Wow! has managed to raise upwards of $78 million in funding to date. Some of the firm's early investors include Tiger Global and Value Quest Capital.

The quick service restaurant industry in India is likely to witness a 20-25% YoY growth in FY24, driven by an uptick in demand and increased penetration, helped by rapid expansion of stores, as per estimates by ICRA.

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FY24 report card

Despite a slowdown in consumption in the early months of FY24, Wow! is well on its way to logging a revenue of over Rs 500 crore this financial year, said Daryani.

While the quick-service chain business will continue to dominate, with a revenue contribution of Rs 490 crore - Rs 500 crore, the FMCG vertical (which includes frozen snacks) would generate about Rs 20-25 crore.

However, Daryani believes that it will take another six months for consumption patterns to return to what it was a year ago.

“I am not very bullish at the moment. We could expect some changes around the general election period,” he said.

Wow!’s same-store sales growth—a metric to measure total sales of a store operational for more than one year—stood at negative 2-3% in the first two quarters of FY24, compared to a positive growth number in the previous year.

During this period, the company opened fewer stores compared to the previous year, indicating a slump in demand.

“There has been a downward trend. I believe that when the times are good, we must run. However, this year, we’re not running but simply crawling,” Daryani pointed out.

While Wow! is yet to file its FY23 financials, Daryani said that it earned a revenue of nearly Rs 400 crore. He also said the company has managed to maintain “excellent” gross margins despite rising food prices and the consumption downturn by slashing discounts on food delivery.

“The business has to be self-sufficient. Discounting to acquire customers is okay but one can’t keep doing that to build revenue," he said.

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Global goals

After expanding to 630 outlets across 35 cities over the past 15 years, Wow! Momo Foods now has global ambitions.

It aims to make a presence in Southeast Asia, GCC nations, and Bangladesh over the next three to five years, cementing its dream of making Indo-Chinese cuisine a global phenomenon.

Daryani noted that Khazanah’s stronghold in these regions will open doors for Wow! when the time comes.

“We have seen Domino’s and KFC come to India from abroad. Our idea is to take the Wow! brand global,” he said.

Wow! is also looking to multiply its offerings with the addition of Wow! Kulfi for dessert and several snacks to its frozen food portfolio. It recently introduced the Wow! Eats brand, which brings all its different verticals under one umbrella. 

“It's like a mini food court. We will continue adding more value to the consumer because we stand for organising the unorganised and creating healthier and more affordable options,” said Daryani.

The chain is also in talks with a nationwide multiplex to set up stores for movie-goers and a large grocery player for a similar offering.