An interview with Shen Feiyu, GM of Shanghai Merrylin Restaurant Management Co.Ltd

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There would be one more artist in Shanghai if Shen Feiyu hadn’t chosen the restaurant business. As he says, “arts should be the basic factor of a human being, and arts can be looked on as one of our working tools”. Right! Who can say that running restaurant is not a kind of art?

Sitting in his office in the 31st floor of Changfeng Centre Building, Yan’an West Road, Mr.Shen spoke tirelessly to us about the establishment, expansion and future development of the Merrylin Group. His first sentence is, “please don’t only write about me, I’m just the part of the group. Without my colleagues support I can’t go so far. Maybe simply focusing on the Merrylin restaurants and Motel will be a good theme!” But almost everyone knows Merrylin in Shanghai. The slogan “Eating at Merrylin, enjoying the ‘Merry’ time”, created by Shen Feiyu when Merrylin was born, is still showing on Shanghai TV. The brand is now famous, but few people know the founder’s name – there is no title in his business card.

We respect every interviewee, but we should briefly introduce this “art” boss. Born in Shanghai, he was ranked in the Forbes list of the top 300 richest people in China in 2002. In his youth, he wanted to devote himself to the arts. After he retired from the army, Shen Feiyu took two courses that affected his future, including a JV Manager course in 1987. He changed his mind and went into the restaurant business, becoming a giant of the Shanghai hospitality industry. He cannot deny the hand of fortune as he recalls every step. “At the beginning it was not following my career design, but everything has been what it would be”. But opportunity only comes to people with ability. We are interested in how he “drew” in his enterprise.

Merrylin – the first stroke

With his overseas background, Shen Feiyu was commissioned as the vice general manager of the first JV hotel in Shanghai, the Friendship Hotel. And working for the Meishilin restaurants in 1995 made him understand the huge market here-in

one Meishilin restaurant income could reach RMB 8 million monthly. So he quit his job and began his own enterprise.

The first Merrylin branch opened on Dong Ping Lu in 1996. Merrylin means “good” and is easy to remember. The restaurant decoration benefited from Shen’s art training. He integrated Western culture into this local restaurant, the traditional food blending with solid lighting and statutes to create his unique style. His strong advertising slogan, “Merrylin, Manlingge”, which in Shanghai dialect means “really good”, has become local children’s slang. It is even well known amongst foreigners. With its successful brand strategy Merrylin leapt into the top-rank in a short time, avoiding the fierce competition in the entry- level market. Shen Feiyu shows his special sense of business. “Running a business is like purchasing stock, and converse thinking is essential. If you are at the heel of others, you will be tied up in the stocks and watch others earning money”.

Attracting customers was the first step, but only by keeping those customers can the enterprise really develop. “We focus on three qualities – food, service and environment”, says Shen, “so every customer dining at Merrylin will enjoy hospitality and delicious food in a comfortable environment”. Service is the most important of the three, so Merrylin has established a strict training system, including standard phrases used “We focus on three qualities – food, service and environment” by waiting staff. The system works – after seven years, there are now 11 Merrylin branches. They have now opened a branch in Beijing, Yuetan branch occupying 30,000 square feet of space. Shen Feiyu thinks the current macro-economic environment, which is supportive of private enterprise, is much better than when he was starting up.

Wield the “pen” at The Bund

Shen Feiyu does not restrict his “drawing” to just the restaurants. He has also invested a lot in related businesses – like a successful artist who pays more attention to the quality of his drawing tools. So he has his own decorating and arts design companies. There is even an art room in his headquarters – he showed us two imitation Roman statues in his office. “We produce all of them ourselves, copied from the Louvre Museum”. All those artworks not only decorate every Merrylin restaurant in a unique style, but also reduce the investment. All of this ensures that customers get better food at a fair price. And because of the combination of his core and supporting businesses, the supporting businesses can explore the market too. This is a “win-win” situation for the group as a whole.

With expansion of the restaurant chain, Shen Feiyu then entered the hotel market. He realized there would be saturation in the Shanghai restaurant market, because the entrance barrier is too low. Prices would fall and the company would not be profitable. In 2000, Merrylin invested RMB 50 million to hold 50% property rights in the Changhang building, previously owned by the Shanghai Changjiang Shipping Corporation, which had been left unused for six years. Shen Feiyu created a new cooperation model. Merrylin decorated half of the building, and they ran this for three years rent-free. All the profit during these years was shared with their partners. All investments were repaid in three years. This was another “win-win” model between Merrylin and outside partners.

The same success came with others. At the GM Merrylin hotel, each side holds a 50% share. At the Yongda Merrylin Hotel, Merrylin holds 40%, Yongda holds 30% and GM holds the rest. When an artist draws they need one kind of vigour, and running a business also need the same vigour. Merrylin clearly has that “vigour”.

A New Highlight – the “Motel”

But Shen Feiyu was not finished – he had other ideas for the Shanghai hotel market. World hotels are of two styles – luxury and economy. In the West, the ratio is 3:7, in

other words economy hotels dominate. But the opposite is true in Shanghai. Economy hotels are rare. “I have planned for three years and investigated Western countries that have a advanced hotel market. Finally, I found the niche – motels”. As Shen Feiyu points out, “private car ownership is growing quickly. And white collar workers have more travel time for their holidays. But right now only a few hotels can supply the service what they want”.

“I found the niche – motels”

What’s the difference between motels and other common hotels? Shen Feiyu says, “motels are focused on perfect decoration and lower prices, and concentrate on the customers”. In May 2003, Merrylin opened the “Motel 168” Wuzhong branch, on the “Automobile Street”. This is the right place for a motel! Motel 168 was set up on an abandoned factory, and rebuilt into a family setting. Room facilities include cable TV with 50 channels, wireless internet surfing, VDO and independent air conditioners, and a children’s bed. There are 50 parking place for customers.

Merrylin has successfully imported a new hotel style into China. The CEO of a South Korea multinational has rented a room in

the Motel 168 for one year. Shen Feiyu now has confidence in the concept and is increasing his investment, with three more branches in Shanghai – Motel Anyuan, Motel Tianlin and Motel Jinqiao. More will surely follow.

But he won’t simply focus on the local market. “We have a plan to open the first branch in Australia, to make Motel an international brand”. The international strategy has been there since the start – that is why the hotel was called “Motel” instead of “Merrylin Star”, to make it easy to promote globally.

Talking about foreign competition, Shen Feiyu said, “we choose ‘Motai’ as the brand and ‘Motel’ as logo to set the first barrier against competition, and our experience in restaurants and hotels increases our competitiveness”. What can Motel learn from the West? “There are several multinational companies who want to cooperate with us. We favour those who were strong backgrounds. With their investment we can occupy this market more quickly”. We can feel Shen’s eager mind at work.

What is Merrylin’s Final Stroke?

Taking with Shen Feiyu always generates new ideas. What is the future strategy of Merrylin Group? He said it is on the way, but he can’t “let the cat out of the bag”. But looking at the structure of Merrylin, it’s not difficult to see that Shen Feiyu is focusing on the tourism industry. Merrylin restaurants or the Motel chain are just single artworks of this art exhibition. He looks at the profits that the whole “exhibition” can produce, not just a single artwork. So some day, when you come China, don’t be surprised that a single Group supplies everything you experience. That day, you will understand what Shen Feiyu wants.

Shen Feiyu loves art. He said, “only when I had one million yuan did I start feel be rich. Right now I’m a billionaire, but money to me is simply numbers. I just pay more attention to this business”. So far we have only seen parts of his “art”, we don’t know when he will stop his “drawing”, maybe never. Let us wait for the next “stroke”.

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