Why Delivery is a Double-Edged Sword for QSRs like Wow! Momo

Wow! Momo, a popular quick service restaurant, is facing a challenge. While they've been making much more money, their profits are still low. The main reason? Food delivery.

The Delivery Dilemma

Before the pandemic, only 10% of Wow! Momo's sales came from delivery. Now, it's a big 45%. This shift means higher costs. Food delivery apps charge a lot, around 20-25% in commission. Plus, Wow! Momo has to spend money to be seen on these apps and offer discounts to attract customers. These extra costs are making it hard to earn good profits, even though more people are ordering.

Strong Sales, Slow Profit Growth

In the last financial year (FY25), Wow! Momo's sales jumped by 35%, reaching ₹625 crore. This is a good sign! But even with more sales, their losses haven't really gone down. They've stayed around ₹114 crore since FY23. When delivery sales were low, the company actually made a small profit. Now, with high delivery costs, they're losing money.

Expanding for a Brighter Future

To fix this, Wow! Momo is doing a few things. They're opening many new stores, especially in smaller cities and towns. They hope that more people will eat at their restaurants directly, which is more profitable than delivery. In FY25, they opened 150 new stores, bringing their total to 700. They plan to open 20-25 new stores every month.

Wow! Momo is also growing its other businesses. Their packaged food division (like frozen momos and noodles) is growing fast. They're also starting a new business supplying food to hotels and other restaurants, hoping to use their food-making facilities more efficiently.

Aiming for Public Listing

Wow! Momo wants to become a public company in the next 2-2.5 years. To do this, they need to make more money. They recently raised ₹150 crore and plan to raise another $100 million soon to help with their expansion plans. The goal is to make good profits before they go public.

Read more: List of TCS Office Locations in India: Metros to Tier-3 Cities

Conclusion

Wow! Momo is working hard to balance its rapid growth with the high costs of food delivery. By opening new stores and expanding into new business areas, they aim to improve their profits and achieve their goal of becoming a publicly listed company.

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