Fast-growing momo brand Zomoz, founded in 2016, is eyeing a significant milestone of INR 3 crore in monthly revenue by December 2024. The brand currently operates 70 outlets across six cities, with a focus on cloud kitchens and retail outlets. Founder Shouvik Dhar opened up about Zomoz’s ambitious expansion strategy, and why automation has been key to the brand’s growth.
“Our primary focus is on growing the business and doing it fast. The immediate goal is to reach a monthly run rate of INR 3 crore, which we expect to achieve in the next four months — by December. We’re targeting this milestone with our existing outlets, so the growth won’t come from opening too many new locations. Instead, we’ll be introducing new categories within our current outlets to hit that number,” he said.
Zomoz has automated momo-making operations, as the challenge of producing momos consistently by hand made it difficult to expand efficiently. The brand invested heavily in machinery and even reverse-engineered imported equipment to automate the process, which took over 15 months.
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Right now, Zomoz is operating in six cities — Bangalore, Chennai, Pune, Mysore, Hyderabad and more recently, Mumbai, where it is planning additional outlets.
Expansion in Tier 2 and Franchising
Dhar also talked about Zomoz’s growth strategy over the next six months, that will focus on expanding into Tier 2 and Tier 3 cities, leveraging its experience in markets like Mysore and Bangalore, where the brand has received positive feedback. Locations have already been signed in cities like Ongole, Nellore, Vijayawada, and Raipur. Dhar believes these cities offer significant growth potential with lower rents but strong sales.
Franchising is another area where Zomoz plans to make strides. “We’ve signed a few franchises — about four or five — and we’re going to see how this model pans out,” Dhar revealed. The brand is experimenting with a mix of FOCO (Franchisee Owned, Company Operated) and franchisee-operated models, with the goal of scaling faster. “If franchising works, we can double the rate of expansion,” Dhar said, noting that the centralized production in Hyderabad helps maintain consistency across outlets.
Zomoz is also in the process of raising funds to fuel its expansion. “We haven’t raised funds in quite some time, but we’re now in talks with a few VCs,” Dhar said. The outcome of this fundraising effort will determine whether the brand continues to open its own outlets or focuses more on franchising. “Ultimately, the goal is to scale and scale fast, whichever way we go.”
Cloud Kitchen Play
With 70 outlets, including 26 retail locations and the rest as cloud kitchens, Zomoz has managed to establish a significant presence. However, Dhar is candid about the challenges cloud kitchens pose, particularly for low Average Order Value (AOV) businesses.
“Cloud kitchens are never going to be a hugely profitable channel,” Dhar noted. “Our margins in cloud kitchens are about 10-12%, compared to 20-25% in retail outlets. But the low Capex required to open a cloud kitchen makes it a great way to increase reach quickly.” Still, Dhar acknowledges that cloud kitchens remain a discount-driven market, largely due to the high commissions taken by aggregators and the need to offer discounts to attract customers.
Besides that, Zomoz’s new market initiative includes patented momo vending machines. The company is in talks with 24/7 cafeterias in Bangalore for its placements, Dhar shared. While vending machines aren’t part of the current financial model, Dhar sees them as a potential game-changer for expanding the brand’s reach.
