Can WOW! Momo Scale-up Pan-India without a Franchising Model?
| Case Code: LDEN206 Case Length: 8 Pages Period: 2008-2023 Pub Date: 2023 Teaching Note: Available |
Price: Rs.300 Organization : Wow Momo Foods Pvt Ltd Industry :Foodservice Countries : India Themes: Growth Strategy, Entrepreneurship, RetailTech,Brand Extension |
Abstract Case Intro 1 Case Intro 2 Excerpts
Abstract
Wow! Momo, India’s fastest growing fast food chain specializing in momos, was founded by classmates Sagar Daryani and Binod Homagai in 2008. They started selling steamed momos from a small kiosk within Spencer’s hypermarket premises in Gachtala, Tollygunge, in south Kolkata initially investing INR30,000 (USD 368) in the business . The case describes the early struggles of the founders and what made them decide to start a business selling momos. The duo slowly expanded their menu to include momo-filled burgers (MoBurgs), and momo-based desserts.
The case then focuses on the growth phase of the food chain. While the Wow! Momo business was growing it was not doing so at the pace the founders had planned. The growth began when Wow! Momo raised INR100 million (US$1,208,500) from the Angel Investment Network in 2015. The company initially decided to look at growth from franchising but the founders continued with company-owned branches across India from the funding received. By 2016, Wow! Momo was selling 0.15 million momos across India and had an annual turnover of over INR 300 million and employed 850 people across the country. The food chain had a lean operating approach. It kept the business model very simple with only 15 SKUs (Stock Keeping Unit), 12 types of momos, one thukpa (a Himalayan noodle soup), and three types of sauces. The 15 SKUs were prepared in the central kitchen and supplied to different stores. Wow! Momo operated five base kitchens across eight cities.
The case then describes the various initiatives that led to the growth of the food chain. Product innovation was one of the key reasons. Over time, Wow! Momo developed a vast menu with 120 options which included starters, soups, and main courses. The food chain also extended the brand to other recipes. In February 2019, Wow! Momo launched Wow! China with the objective of redefining roadside Indo-Chinese food. In February 2021, it launched Wow! Chicken that provided consumers with the option of venturing beyond the conventional taste with the latest fried and grilled specialty options. As of 2022, the company had over 480 stores across three brands – Wow! Momo, Wow! China, and Wow! Chicken – in 21 cities and aimed to enter a hundred new cities. In this scenario, it remained to be seen whether the company-owned-company-operated (COCO) model of Wow! Momos would become a bottleneck for the QSR to scale up and expand globally. Would the co-founders finally decide to switch over to a franchisee model?
Issues
The case is structured to achieve the following teaching objectives:
- Discuss the advantages and disadvantages of the franchising model.
- Examine how the service element poses challenges for scaling up a brand in the foodservice industry.
- Assess the role of product innovation in business growth in the fast food segment.
Contents
Keywords
Franchising Model; Product Innovation; Positioning; Product Mix; Brand Building; MarkTech; Scaling up; Brand Extension; Growth Strategy,Quick Service Restaurants (QSR) Market; Chinese food; Metaverse; Fast food business;
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