Case Study :
Read the Wow Momo Case and use your knowledge to develop a go-to-market strategy for WOW! Momo (approx 500 words)
On a pleasant spring morning in September 2018, Shah Miftaur Rahman, co-owner of Wow! Momo Foods Private Limited (Wow! Momo), reviewed the company’s recent financial statement. The statement made Rahman happy but not entirely content. The company was growing, but their goal seemed elusive.
Wow! Momo, a quick-service restaurant (QSR) chain, was a start-up based in Kolkata, India. It sold various types of Tibetan steamed dumplings, known as momos (see Exhibit 1). The restaurant’s specialty was a pan-fried variety of momos, prepared to suit the Indian palate (see Exhibit 2). Wow! Momo was founded with an initial investment of just ₹30,0001 in March 2008 by college classmates and now had 244 outlets spread across 13 cities.
INDIAN FOOD-SERVICE INDUSTRY
The Indian food-service industry was largely dominated by unorganized players like street-food providers, small shops, dhabas,2 and small, roadside kiosks. In 2018, the total market size was ₹3,710 billion, of which, ₹2,385 billion constituted the unorganized market, followed by ₹935 billion in the organized stand-alone market, ₹285 billion in the chain market, and only ₹105 billion in restaurants and hotels. Over the previous few years, the Indian food-service industry had consistently maintained a compound annual growth rate (CAGR) of 10 per cent, which was expected to persist for the following five years.
In 2018, the QSR sector was estimated to be worth ₹85 billion and was growing at a CAGR of 25 per cent. The sector was expected to grow threefold, to ₹250 billion, within five years.4 Fast-food outlets had been introducing a variety of products and variations on the products to cater to the demands of each and every segment of the market and to interest people of all ages, genders, classes, and income groups. Fast-food outlets in India had particularly targeted children as their major customers, introducing product varieties that would attract children’s attention. By targeting children, the outlets automatically captured parents because children were always accompanied by their parents.5When the QSR and CDR market was assessed by region, megacities such as Delhi and Mumbai claimed 22 per cent of the market; mini metros, such as Ahmedabad, Pune, Chennai, Kolkata, Bangalore, and Hyderabad, claimed 20 per cent; medium-sized Tier 2 cities claimed 11 per cent; and the remaining 47 per cent of sales came from the rest of India
Wow! Momo was an Indian chain of fast-food restaurants headquartered in Kolkata, West Bengal, India. Founded in 2008 by college mates Sagar Daryani and Binod Kumar Homagai, and later joined by a third college mate, Shah Miftaur Rahman, the restaurant specialized in momos , a dumpling popular in Nepal, Tibet, and India. It was Daryani’s idea to sell momos. Back in their college days, he and Homagai regularly bought momos from a woman at their school, who had a good number of customers; her success assured Daryani that high-quality momos could be sold in Kolkata. Rahman was introduced to momos when he joined Daryani and Homagai for group studies. Rahman tutored the other two in commerce subjects, while Homagai, being Nepali, prepared the momos. Daryani recalled speculating about how momos could be commercialized through a QSR: The momo as a product had been well accepted in the Kolkata market but had not been branded. The problem was that momos were considered roadside food. It was the same situation in Delhi, where momos were sold from thelas [pushcarts]. Hygienic momos were absent everywhere. So, it was a good opportunity to brand the product.
Rahman reasoned that if foreign companies could bring pizza and burgers to front-line fast food in a country like India, there was no reason they could not do the same with momos, with proper branding and distribution. Daryani and Homagai formed and subsequently incorporated the company in 2009. After five years of working at PricewaterhouseCoopers, Rahman, a chartered accountant, joined the other two in 2015 and took on the role of company secretary.
The company started with steamed momos and soon expanded to include 12 varieties, including chicken, chicken and cheese, Szechuan, and prawn. For vegetarians, the offerings included corn, corn and cheese, and paneer, among others. Steamed momos were easy enough to make, so the team also introduced a pan-fried variety. They fried the momos in different sauces to allow for spicy, sweet, or sour flavours that would suit the Indian palate. Their efforts in Indianizing momos became a significant, unique selling proposition for the company. The idea was that people would take a bite of the momos and say, “Wow!”—hence, the company’s name, Wow! Momo.
Rahman described their initiative: You access an opportunity by understanding there is something passive lying in society that has not been marketed well. You grab this opportunity and try to solve the problem. We were trying to address a set of customers who had been eating pizzas and burgers (and were possibly done with eating those) and were trying to give them something healthy.
When Wow! Momo launched, Daryani began his day at 5:30 a.m., buying the raw materials, such as chicken and vegetables. The stuffing (of vegetables or chicken) and outer cover (of flour dough) of the momos were prepared. The stuffing was placed in the dough sheets, shaped up like a dumpling, and sealed for steaming. He transported the momos to Spencer’s on his bicycle, using hot cases to ensure the momos remained fresh. Daryani and Homagai worked from 6:00 a.m. to 6:00 p.m., and after closing their stall, they walked home to save money. Almost 10 years later, they had a fleet of 50 vehicles and worked from 9:00 a.m. to 11:00 p.m. They believed that one rupee saved was five rupees earned.The first stall at Spencer’s led them to secure a location in Kolkata’s South City Mall, which had the biggest Spencer’s store and was the best mall in Kolkata. The second stall opened four months after the first and was a pivotal event for Wow! Momo. A plate of momos from Wow! Momo sold for ₹40, and, according to the team, after they opened their second stall, the company’s revenue increased from ₹50,000 a month to ₹900,000. With the additional income, the team hired more people and invested in research and development (R&D) for their products.
The Concept behind Wow! Momo
From the beginning, Wow! Momo sold branded momos to offer a different experience to the customer. The team understood that there were some people who would not buy a plate of momos for ₹80–₹100 when the same could be obtained for ₹40 as street food—but with lower-quality ingredients. But Wow! Momo never intended those customers to be its target; rather, the company targeted customers who were looking for authentic, hygienic, and affordable branded momos. The vision was to bring the traditional, authentic food of Nepal and Tibet to a wider audience, incorporating momos into people’s daily lives for breakfast, lunch, or dinner. The momos could be steamed, fried, or pan-fried; they could also be made into burgers or sizzlers (a dish that comprised of momos and some other accompaniments, all served on a metal hot plate, kept on a wooden base), thus offering customers many options for customization. Rahman explained, “Answering the customers in terms of what is new is very difficult. Ensure you give people what they want. Give them more through innovation. Innovation in product offering has been an answer to ‘What is new?’”
Daryani explained the philosophy behind their business model: We took small steps toward this goal. Our plan was clear to the team, so they worked cohesively to achieve the goal. We were clear on objectives, ensured our requirements were met, and worked cohesively. We ensured the team was aligned to the vision. [We knew what we needed to do:] have a business plan, work cohesively, and be aggressive. Also, ensure the company is profitable or else you cannot ensure scalability.
Rahman added: A company cannot grow without profits. Otherwise, the business would make no sense. Unlike a tech company, we could not keep on burning and scaling up. We could not afford that. Organizational requirements had to be met. We were not funded. We were internally sourced. We were hand-to-mouth then, as we are now. We are still a start-up. Our vision is to take the restaurant from being a national brand to making it an international brand. We envisage Wow! Momo at Times Square, New York, etc.
During the initial stages, all momos were steamed. Rahman explained, “We are in the business of fitting people’s palates. Wow! Momo is fusion food, basically—the sizzler is Chinese, au gratin is continental, the chocolate momo is from nowhere, the burger is American—and the momo is available in all these forms.” By the end of 2016, only 5 per cent of customers (authentic momo eaters) asked for traditional steamed momos, while 95 per cent wanted to play with the taste, innovate, and try new things. Rahman believed that variety was what helped the company
As the company added new products, they also removed old products from the menu. Rahman said, “If old products are not removed, the result is clutter, which feels claustrophobic. People get variety and also get the right mix.” The fish variety, for example, was removed from all cities except Kolkata, Chennai, and Cochin, where demand for fish momos existed.
Production and Operations Wow! Momo operated in six different store formats: (1) food court, (2) high-street mini (a store between 250 to 350 square feet with a kitchen and seating facilities in a residential area), (3) high-street maxi (These were stores in high street residential areas. Area of these stores were between 500 to 800 square feet with kitchen and seating facilities), (4) in-store kiosks, (5) kiosks on wheels, and (6) delivery outlets (see Exhibit 7). To facilitate sales at gasoline pumps and crowded places where one of the six store formats was not present, the company served its momos using a battery-operated flameless steamer and fryer. The Momo Man (someone dressed in a Wow! Momo uniform) would reach out to the customers right where they were (e.g. gasoline pumps, bus and taxi stands, or other crowded places) to make the product easily available to the customers.
Operations at the stores were simple. Steamers and fryers had a timer. The store operator would steam or fry the momos, put them on a plate, and serve them. For pan-fried momos, the premixed sauces (in 30-millilitre and 60-millilitre sizes) were sent to the stores as weekly stock. Staff at the stores would chop onion and other ingredients before opening for business. When customers placed their order, staff would add the chopped onion and premixed sauce to the momos, cook them for two minutes, and then plate and serve them. Rahman believed that the staff were proud to work at the restaurant, commenting, “These store boys post on social media [Facebook, for example], ‘Chef at Wow! Momo.’ This gives them a good feeling.” Before entering a new city, Wow! Momo would do a market survey. A market survey team would go to the city and spend some time assessing its capacity for the number of stores that could be opened there. Rahman described the process: “For example, 60 days from now, we shall be opening our store in Goa. We have a plan for 20 stores in Goa. We make our base kitchen in that city accordingly. In Mumbai, we made a larger base kitchen because we thought we could open 100 stores in Mumbai.”
Growth in the QSR and CDR segments of the food-service industry in India had been sustained by favourable demographics. Fifty per cent of the Indian population was under 24 years of age, and about 70 per cent of the population was under 35 years of age.7 The country had approximately 20 per cent of the world’s working-age population.8 These groups, constituting Indian youth, aged 13–35 years, were the major consumers of the QSR industry. About 25 per cent of youth preferred socializing with their friends over other outdoor entertainment activities.
Rapid urbanization and modernization and the spending power of the middle class and millennials were some of the important drivers of growth in the QSR industry. Moreover, working professionals were becoming busier in general and, hence, were depending on fast food for their meals. These factors applied to Indians as well. Women tended to be more engaged in their professional lives and often did not have enough time to cook food at home. As a result, the whole family was becoming dependent on fast food to a greater degree.12The QSRs in India were present in varying formats, such as dine-in restaurants, food courts in malls, and drive-in restaurants on highways, all of which provided the customers with easy access to food. These QSRs were more often found in metro and mini-metro cities, where consumption was higher and consumers were more aware of the QSR brands and their offering in the market.
There were nearly 100 fast-food brands, with over 3,000 outlets, spread across India.13 A report released by the Associated Chambers of Commerce and Industry of India acknowledged the penetration of several national and international players in the QSR space, which in turn had broadened the market of the individual market-players. This effect was attributed to the growing middle-class segment, urbanization, increasing number of nuclear families, greater spending power among youth, and improved logistics.
Wow! Momo worked with schools and colleges and provided internships. The company also celebrated holidays like Independence Day and Republic Day by serving tricoloured sauce, and staff wore traditional outfits. During festivals like Holi, Diwali, Eid, and Durga Puja,29 Wow! Momo made new logos for the specific occasion.