How Bombay restaurants duped US investors of Rs 31.5 cr by selling great franchisee dream

Colorado state regulators have accused two Indian restaurants of defrauding investors to the tune of USD 380,000 and are now seeking to recoup the funds from them, reported PTI.

According to a lawsuit filed by the Colorado Division of Securities, the owners of Bombay Clay Oven and Saucy Bombay allegedly used "half-truths and lies" to entice investors with ambitious plans for a nationwide expansion. They purportedly spent the investors' USD 380,000 on rent, operational expenses, and Ponzi-like payments, as per a report by the local newspaper "BusinessDen."

The restaurants, both owned by The Bombay Group (TBG), collaborated with securities broker Michael Bissonnette. However, both defendants reportedly declined offers to discuss the accusations with "BusinessDen."


Similar to many others in the restaurant industry, TBG envisioned an extensive expansion of its business into a nationwide chain, potentially with hundreds or thousands of locations. At the time, TBG operated two restaurants: Bombay Clay Oven, an established restaurant with over two decades of operation, and Saucy Bombay, a new venture situated in a food court.

TBG aimed to franchise Saucy Bombay to capitalise on the growing trend of fast-casual dining, as outlined in the lawsuit.

"The investors in this case really believed in The Bombay Group and their restaurant, Saucy Bombay," Tung Chan, the state's securities commissioner told the newspaper. "But as we allege, the investors were not told the truth about the investments and they have not been paid back. If you have invested with The Bombay Group, please contact the Securities Division right away," he said.