Delivery Dilemma: Rising Costs Eat Into Wow! Momo’s Profits Despite Soaring Sales

Wow! Momo, one of India’s fastest-growing quick service restaurant (QSR) chains, is facing a profitability crunch as delivery costs surge, even while revenues hit new highs. In FY25, the company’s revenue jumped 35% to ₹625 crore, but losses remained stubbornly high at ₹114 crore—a figure unchanged since FY23—largely due to the mounting expenses associated with food delivery.

 

Key Highlights:

 

Delivery’s Double-Edged Sword: Delivery now accounts for 45% of Wow! Momo’s revenue, up from just 10% pre-pandemic. While this shift has driven top-line growth, it has also exposed the company to high aggregator commissions (20-25%), increased promotional spending, and steep operational costs, all of which are squeezing margins.

 

Visibility Comes at a Price: CEO Sagar Daryani notes that to stand out on delivery apps, Wow! Momo must invest heavily in promotions and discounts, as most users rarely scroll beyond the top 40-50 restaurants. This makes it costly for new outlets to gain traction.

 

Expansion Amidst Pressure: Despite the delivery headwinds, Wow! Momo opened 150 new stores in FY25, bringing its total to 700 outlets, and plans to add up to 240 more this year. The company hopes that expanding into smaller cities will shift some business back to more profitable dine-in channels.

 

Diversification Drive: The brand is scaling its FMCG business (frozen momos, cup noodles) and launching a new Horeca vertical, aiming to improve manufacturing utilization and profitability. The FMCG arm doubled revenue to ₹75 crore last year and is targeting break-even at ₹130-140 crore.

 

IPO Ambitions: Wow! Momo recently raised ₹150 crore in bridge funding and is eyeing a $100 million pre-IPO round, with plans to go public once it achieves ₹70-100 crore in EBITDA.

 

Sources: Financial Express, Entrackr, Angel One