Published by Forbes on 1987-01-26
WHEN HE LEFT his homeland of India 20 years ago, Sant Singh Chatwal had $ 6 in his pocket. Six dollars and the promise of a job. When he got where he was going, the job didn't work out. Never mind. Today the Sikh, 40, dwells in luxury in Manhattan and claims a net worth of $ 75 million, before taxes.
Scene: 1947, the year Pakistan is carved out of the Indian subcontinent. In the consequent uproar, hundreds of thousands are put to the sword -- literally. Hindus and Sikhs flee the newly created Islamic state. Indian Muslims run for their lives to Pakistan. Buried in these statistics are Chatwal, age 1, his parents, Makhan Singh Chatwal and Sita Wanti, and four brothers and three sisters. Fleeing Pakistan, they settle in Faridkot, a small town in Indian Punjab, where the family become small traders.
Scene: 1964. The refugee boy, now 18, escapes the drudgery of his small town by joining the Indian navy. He trains as a fighter pilot and is assigned to India's only aircraft carrier, the Vikrant. He earns $ 200 a month, good money for a poor Indian boy.
Scene: 1967. Chatwal leaves the navy. No future there for a really ambitious person. He goes to Addis Ababa, Ethiopia, where he has been promised a job in the airline of Emperor Haile Selassie. He turns down the airline job after discovering that he is expected to doff his Sikh turban, cut his traditional long hair and shave off his beard. He finds a $ 300-a-month job as a clerk and helps a friend run a Lebanese restaurant. He saves enough money to buy the restaurant and open a second, serving Indian food.
Scene: August 1975. Emperor Selassie is overthrown. The new Marxist government grabs Chatwal's assets. For the second time in his young life, Chatwal is a refugee.
Being a refugee is tough, but some people learn from the experience. They never become complacent, always allow for the possibility of disaster. Chatwal has taken care to slip some of the proceeds from his restaurants, land investments and other ventures out of the African country and has $ 400,000 in a New York bank.
Next stop: Montreal, where Chatwal buys a bar and grill and, the following year, a French restaurant, the Pique Assiette. Chatwal now invents a new kind of cuisine: French-Indian, which becomes very popular with Montreal's trendy set.
Scene: New York, July 1979. Chatwal obtains a lease on a 10,700-square-foot property across the street from The "21" Club at 75 Rockefeller Plaza in Manhattan. Here he opens the first of his Bombay Palace restaurants. By December 1986 there are Bombay Palaces in Houston, Washington, D.C., Chicago, Denver, San Francisco, Beverly Hills, Vancouver, Toronto, Montreal, London, Hong Kong and New Delhi.
There is more than patriotism involved in Chatwal's romance with Indian food. Bombay Palace menus emphasize low-cost vegetables and chicken. Combine inexpensive ingredients with trendiness, deluxe surroundings and good location, and you have a formula that permits high prices with relatively low costs.
According to a report prepared by Laventhol & Horwath, the median cost of food as a percentage of food sales for the restaurant industry in 1984 was almost 40% . The figure for Bombay Palace restaurants was 30%. While median total sales per seat for ethnic dinner restaurants in the U.S. in 1985 was $ 4,604, the figure for Chatwal's restaurants was $ 7,016.
Running a successful restaurant means knowing about real estate -- traffic patterns and all that -- as well as keeping an eye on the kitchen. Chatwal chooses his sites shrewdly and bargains hard on rents. In 1984, looking for restaurant space in Beverly Hills, he found a not very profitable French restaurant whose owner was paying $ 12 a square foot on fashionable Wilshire Boulevard. The Frenchman wanted $ 150,000 for his lease, more than the restaurant was worth but a relative bargain in rent for yet another Bombay Palace.
"Leases are my big strength," Chatwal says. "The trick is to be patient and do as much research as possible on what's available. This is where my heritage and background make a difference. I have the inner patience to be persistent and to put things in the proper perspective." Meaning: Don't be too anxious and never, but never, pay too much.
Finding real estate to his taste, Chatwal has done a good bit of trading in Manhattan realty. In 1984 he contracted to buy a 10,000-square-foot property at Second Avenue and 93rd Street, putting down $ 470,000 as deposit. Within six months he sold his contract for a profit of $ 4 million.
He owns three hotels in Manhattan, three in Canada and two in Daytona Beach. But he has no ambitions to be another Conrad Hilton; he is more interested in depreciation than in glamour. Says Chatwal: "I buy them for tax shelters for the money I make from my restaurants."
He expects to have a lot more money to shelter in the future. Chatwal cites recent studies by Restaurant Business, a trade publication, which show that in 1985 Mexican restaurants did an estimated $ 2.2 billion worth of business in the U.S., and Chinese restaurants about $ 1.5 billion. Against this, all Indian restaurants grossed only about $ 100 million, according to Chatwal. He toys with numbers: Let's see, at $ 500 million, Indian food would still account for less than one-half of 1% of the overall eating-out market, which was more than $ 100 billion in 1986.
Last July, Chatwal cut the public in on a piece of his business. Through Adams & Peck he offered about 40% of Bombay Palace to investors. The approximately $ 5.5 million proceeds were used to retire debt and finance new restaurants in the U.S. By the end of 1987 Chatwal plans to increase the number of Bombay Palaces from 22 to 40. The company reported net earnings of $ 1 million -- about 35 cents a share last year on revenues of $ 9.5 million -- 10 cents on the revenue dollar. This is a very nice margin for a restaurant chain. Chili's Inc., another publicly owned chain, nets less than 5 cents on the revenue dollar.
How has the public fared? Too early to tell. The issue price for 1.1 million shares was $ 5, and the stock has fluctuated just over 50 cents on either side of that figure over-the-counter during the last six months.
While Chatwal is more than happy to serve booze to his customers -- it does good things for the profit margin -- he and his wife, Daman, rarely drink and are fanatics about jogging and calisthenics. Daman Chatwal, a friendly but firm-mannered person, spends several hours a day at the Bombay Palace in Manhattan, supervising the staff. Meditation and exercise, Chatwal says, give him energy for 16-hour workdays. A tall, lean man, Chatwal walks to work from his $ 6,000-a-month, 22nd-floor apartment near Central Park West, a walk that gives him time to think, he says.
What does he think about? Business mostly. Through Bombay Palace, Chatwal is expanding into marketing canned and frozen Indian foods and fast-food chains featuring north Indian barbecued dishes and curries. Having come a long way in his 40 years, Sant Singh Chatwal clearly believes he has much further to go.
Senior Writer and Global-Affairs Columnist