Replace half of the management team every two years, Nancheng Xiangye's performance increased by 101%

Ask AI · How does Nanchengxiang leverage cycle theory to achieve countercyclical growth?

The catering industry needs continuous innovation, and innovation must be sustainable.

Does everyone feel like business is getting harder and harder by 2026? Don’t be discouraged; look at the trends and cycle changes.

In 2025, Nanchengxiang experienced relatively significant growth, increasing by 101%. 2026 is the final year of Nanchengxiang’s “Brilliant Action,” and I still have confidence.

Today’s theme is “Practicing the Long-termism Business Philosophy and Navigating Cycles.” Everyone should grasp the economic cycle and avoid reckless busyness. In 2024 and 2025, Nanchengxiang didn’t open many new stores, and in 2026, we are still observing. During this time, almost no one makes money by blindly opening stores. We need to know when to do what, and when not to.

1. Opening stores at this time will lose 80%; learn to hibernate in winter

Life’s wealth accumulation depends on the “Kondratiev wave.”

I’ve been studying what cycles are. The idea that “life’s wealth depends on the ‘Kondratiev wave’” was proposed by economist Zhou Jintao. He left behind a nearly “fatalist” underlying logic of wealth, using a cold, numerical model to predict a person’s entire life.

For example, in 2006, the world was immersed in real estate frenzy, but he predicted that the prosperity period of the Kondratiev wave had ended, with asset bubbles, especially in U.S. real estate, set to burst completely in 2008. As a result, Lehman Brothers collapsed, leading to the subprime mortgage crisis.

He said: “80% of your wealth accumulation depends on whether you hold the right assets at the right time, while your effort only determines the remaining 20%.”

Everyone was working hard last year, but I think much of it was in vain. Nanchengxiang took the right path: we didn’t open stores last year, instead focusing on internal strength, innovation, and reform.

Zhou Jintao also said, “If you are born during a Kondratiev depression, no matter how hard you try, your wealth accumulation speed cannot outpace currency devaluation.” So some people desperately earn money but find their debts increasing and can’t pay them off.

Therefore, today I mainly want to talk about how to grasp the cycle. The “Kondratiev wave” was proposed in 1925 by Soviet economist Nikolai Kondratiev. It refers to the approximately 60-year long-term fluctuation pattern of the global economy, driven by disruptive technological clusters.

The Kondratiev cycle has four stages: recovery, prosperity, recession, and depression. China is currently experiencing the fifth Kondratiev cycle. I feel that by 2026, we should be approaching the recovery phase.

The Kondratiev cycle is a 60-year macro cycle, with medium and short cycles within it, jointly influencing markets and the economy. For example, the “Kuznets cycle,” related to real estate, lasts about 20 years; the “Juglar cycle,” related to corporate equipment updates, determines bull and bear markets in stocks, about 10 years.

There are also industry-specific cycles, each with different规律. For example, the restaurant industry has a booming cycle of about ten years. According to theoretical extrapolation, we are currently (2023-2026) in the depression phase of the Kondratiev wave, characterized by low growth and high deflation, with stock games where companies earn not from economic growth premiums but from taking money out of others’ pockets. Competition in this era will be more brutal than ever, and expanding stores at 80% will lose money, leading to many business closures.

Everyone should grasp the cycle’s gear, hibernate in winter, wait quietly for spring, and prepare for sowing.

2. Change begins with people: how did Nanchengxiang replace half of its management team?

The ten-year cycle law in catering is equipment renewal. Nanchengxiang’s most prosperous decade was from 2014 to 2024, and business declined in 2024, just after ten years.

Why did Nanchengxiang thrive from 2014 to 2024? Because I used induction cooker equipment, which was rare in catering at the time. Ten years ago, we refused to do stir-frying and didn’t use modern stir-fry machines because costs were too high. Instead, we simplified dishes like beef and酸菜鱼 using induction cookers.

Why did Nanchengxiang decline in 2024? Because new equipment replaced the induction cooker. We re-emphasized the importance of stir-frying, so now Nanchengxiang is adjusting and updating stir-fry machines.

△Image source: TuChong Creative

Within a ten-year cycle, there is a规律——the kill line in catering. Having 30 stores is a threshold; 200 stores is a kill line.

Why is 30 stores a threshold? Because as the company grows, management ability becomes mismatched, leading to low management efficiency.

Previously, Nanchengxiang’s management team consisted of relatives, with family-style management and no real management能力. By the time we reached 30 stores, the team couldn’t handle it.

So how do we突破 this kill line? When first crossing it, set goals and replace the team and personnel.

First, Nanchengxiang abolished股份制, broke family-style management, promoted a culture of奋斗者, eliminated加盟店, and implemented店长责任制, encouraging优秀人才 to go to the front line. The headquarters staff is small but精干, with command centers located where they can hear炮声.

Second, set clear goals: Nanchengxiang aims to be a century-old enterprise, not listed, not seeking融资, and not franchising. We want a group of people to dedicate their lives to one thing, avoid outside investments, and position ourselves as “饭香串香馄饨香” (delicious rice, skewer, and wonton).

Third, implement transparent kitchens, eliminate pre-made dishes; fresh lamb skewers in stores, fresh配馄饨, beef rice dishes that became popular; cancel night markets, add takeout windows, and cooperate with multiple platforms. I was the first to design the takeout window in 2014, capturing the takeout trend and leading nationwide for several years.

Fourth, establish the “Nanchengxiang Constitution” and “Nanchengxiang Basic Law,” which remain unchanged.

In 2024, Nanchengxiang began to decline, just as the ten-year cycle reached 200 stores. This is when the second kill line appeared.

Why does the 200-store threshold exist? Because we had a certain规模, but management能力 couldn’t keep up, processes were un规范,制度不健全, and职业化缺失. Previously, we adopted a店长责任制, with some店长 earning over 1.6 million yuan in bonuses annually. This high激励 was the reason Nanchengxiang grew from 30 to 200 stores.

But after突破200 stores, this approach no longer worked. As the company expanded, high salaries and激励 couldn’t fully apply; some店长 started to躺平, and entropy increased.

In 2024, Nanchengxiang proposed the “Brilliant Action.” In fact,突破 kill lines requires变革, and change starts with people. Without changing people, any改革 is futile—that’s organizational transformation.

△Image source: Nanchengxiang

Therefore, our变革措施 include: first, talent strategy—大换血 of management personnel, with about half of headquarters and店长-level staff replaced. By 2026, headquarters personnel will be mostly stable, with ongoing优化.

Second, strictly enforce制度建设 and考核制度, evaluate headquarters staff, and monitor attendance and travel.

Third,模式创新—Nanchengxiang now has multiple模式, including 2.0 and 3.0. The 2.0模式 involves改造老店, while 3.0 uses机器人炒菜. These two coexist without completely overturning past models.

△Image source: Nanchengxiang

Fourth, technological innovation—establish a product and equipment研发中心, composed of设备专家,采购人员, and厨师 from various cuisines, forming a top-tier厨师顾问团.

3. The future of catering is like Amazon: front-end earns traffic, back-end makes money

What are the risks of 2,000 stores being eliminated?

Large规模 doesn’t necessarily mean安全. In recent years, many stores have closed, like梁山好汉能打 but没有经济来源, ultimately being招安. As long as a business isn’t profitable, whether it has 2,000 stores or more, it will be eliminated—no profit, no future.

The risk of being abandoned by capital—this doesn’t mean capital is bad. Some capital truly invests, while others are speculative. Mode创新的大船难掉头; also, risks from技术迭代未跟上, including digitalization, takeout业务,炒菜机, and AI applications.

We’ve mentioned AI multiple times. I just returned from the US a week ago, visiting many big companies in San Francisco, Silicon Valley, and Seattle, all emphasizing AI. Many might think catering has nothing to do with AI, but it does. Just like digitalization when it first appeared, people didn’t understand it. Without digitalization, there’s no takeout, no扫码点餐, and digitalization has brought huge changes to catering.

AI is similar; in the future, AI might reduce office staff by half, help us understand customers, manage ordering, and upgrade supply chain systems.

Therefore, the catering industry must keep innovating, and innovation must be sustainable. Companies should cultivate a culture of innovation.

How does Amazon make money? Amazon is an e-commerce retail company. Now, Amazon is no longer just e-commerce; its core is traffic-driven retail, cloud and advertising profit, and service cash flow, forming four main profit pillars. So Amazon doesn’t make money selling products; it earns from the back end—selling products to generate traffic, then making profits from AI, advertising, and services.

The future of catering will be similar. Nanchengxiang’s real profit comes from the back-end supply chain.

This article is a transcript of Nanchengxiang founder Wang Guoyu’s speech at the “2026 China Catering Industry Festival,” compiled and published by Hongcan.com.