What’s so Wow about Wow Momos

Momos are the most loved Indian street food. It originated in Nepal but is consumed on a much larger scale in India comparatively. Momos are somewhat like dumplings, but they have their differences. Just like any other Indian, Sagar and Binod (Co-Founders of Wow Momos) loved momos. They were pursuing their B.com from St. Xaviers and were not so good at maths. Hence, they concluded that MBA is not their cup of tea and started focusing upon ideas for new business. As I said, they loved Momos, and one day an idea struck them, why not start a Momos stall. They both agreed to this decision, and that’s how they opened their first stall in 2008 in Kolkata when they were in the final year of their graduation. They started with a small stall, but today they are enjoying huge ongoing growth. They have 320 outlets of Wow-Momos operational today. They are present in almost every city of India. Their annual turnover is over Rs. 200 CR. and have achieved a valuation of 1000 CR rupees. But how did they manage to achieve these numbers, and how they were able to convert their small momo stall into a Brand. So we will take every strategy used by Wow-Momos into consideration and try to learn how can we use these strategies to create and grow our own business.

Financial Alternative

When you are short on finances, start looking for financial alternatives. Many people spend their lives blaming their poor financial condition, responsible for their failure to start a business. Even Mr.Sagar Daryani, and Mr.Binod Homgai, didn’t have a single penny to get started with, but they did not make this excuse and started looking for an alternative to cover up their lack of finances. Sagar took a loan of Rs. 30,000 from his father and bought a kiosk. Now, they wanted to place this kiosk in a location that had a huge footfall. So, they approached Spencer’s retail as it is one of the largest retail chains in India and could bring a lot of customers to their kiosk. But, there was one problem, Spencer’s demanded a big fat amount as rent, but Sagar and Binod were not financially sound to provide spencer with that amount. Hence, they agreed with the spencer retail store. They promised to share 18% of their revenue with spencer, but they demanded a sample to judge whether or not they were able to sell and generate revenue with their kiosk. Since Sagar and Binod did not have the knowledge and skills to prepare a Momo, they bought it from their favorite outlet and presented them in front of Spencer’s staff as a sample of their business. Spencer’s agreed to provide them with the space required for their kiosk, and on the first day, Wow-Momos made a revenue of Rs. 2200. But they still needed a good cook for their business, so they hired a part-time cook named Ramji on a salary of Rs.3000. Despite not having resources, they were still resourceful. Sagar woke up every day at 5 A.M. and bought the required raw materials. Within no time, their business saw a huge revenue of Rs. 60,000, looking at these numbers, spencer’s offered Wow Momo shop and gave Wow-Momos their first expansion. It was the boost that Wow-Momos needed, and in no time, Wow Momo started to generate a revenue of Rs.2,00,000 per month and jumped to Rs. 7,00,000 soon. 
The profit that Wow Momo saw in its initial days was just because of one thing, their product. They hired the right person for the right job and hence were able to provide these numbers, as people were coming back to their stall because of the taste of their Momos. They not only grabbed the attention of spencer’s customers but were also successful in building a customer base of their own. People were now visiting spencers specifically for their momos.

Innovation Is The New Game

You will eventually fail to expand your business if you are not innovating. To innovate, you need to have a love for your business and your product. Wow-Momos thoroughly studied their consumer behavior and observed that their consumer mostly belongs to the upper-middle-class group. They have the money to spend on their wants, as their disposable income is high. Hence, they started introducing new varieties of their products; Like Pan-fried Momos, Cheese Momos, Baked Momos, even momo burgers, and chocolate momos were included in the Wow-Momos menu. People were loving these Momos, as all these momos were loved by their CEO. Sagar launched a new variety of momos only if he was satisfied with their taste. Most of the food is precooked, and the process is mostly automatic. They operate on a model of Hub and Smoke, everything is prepared in a hub and then is distributed among all the outlets within the range of that hub, and Standard Operating System makes sure that the taste is consistent, no matter who prepares the food.

Synergy Brings Energy 

People often take pride in being an expert in their fields, but the truth is one cannot be an expert in every aspect of the business. An individual will always lose to a team. Business is always capitalization of people. You need to form a strong team of people who specialize in a specific field. Wow is an expert in creating a team. They know how to treat their employees and how to retain them. Remember Ramji, the first chef of Wow-Momos. Today, he is the head chef of the company and has a monthly salary of Rs.1.5 lacs. It is one of the biggest factors that contribute to the success of Wow-Momos; When you create wealth, you must know how to share it.

Revenue Up-Scaling

Wow-Momos has always focused on profits. They make sure that their cash outflow is always less than their cash inflow. They open up their stores according to the location. If the rent is high, they will set up a small store in that area, and if the rent is low, vice-versa. They also know how to diversify according to location, like they introduced 100% veg momos in the area that has a greater population of vegetarians. They also introduced Jain momos, as Jains do not have many fast foods available in the market that can match their eating preferences. They also started cross-selling and converted their snacks into meals and combos. People who came to buy just Momos see combo as a much cheaper option according to the quantity, and hence do not hesitate before upgrading their orders.

Sustainability over Growth

What does it mean? See, most startups focus on their growth but take sustainability for granted; revenue keeps on increasing, but they hardly earn any profit. That is what Wow Momos did differently. They made profits their priority and created a profitable business. They became a part of the 2% club (98% of the Indian start-ups are on a cash burn). They didn’t raise single funding before 2015 and then also survived in the market. How did they do it? Well, they followed a simple rule of reinvesting their profits, they used to set up one store, and whatever profit they gained, they utilized it to open up a new store, which resulted in the sudden compounding of their profits as the profit sources were multiplied during the initial stage. Most of the businesses are profitable on the transactional level but fail to become profitable at the organizational level. Wow-Momos was profitable in both aspects. In 2015, they raised their first funding from IAN (Indian Angel Network) of Rs.10 crores and after 2 years raised their second of Rs. 44 crores from Tiger Globals, and again in 2019, they raised 165 crores from the same company and reached the valuation of over Rs.1,225 crores. 

Conclusion

You require money to make money; this theory was just a myth for the Wow-Momos founders. They did not have a single penny when they started and did not raise any funds for almost eight years. Still, they not only survived but were even profitable since day 1. Today Wow Momos franchises are spread all over India, they opened up around 317 outlets till 2018, and even the smallest of their outlet generates a revenue of around Rs. 5,00,000 each day. Wow-Momos CEO Mr.Sagar Daryani says that Employees are the biggest assets and has proved it many times. He even pledged to open up Cancer Hospitals when one of his employees' fathers died because of this disease. You do not need to be an MBA to start a  business, and the biggest example for this statement is the founders of Wow-Momos.

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