Nancheng Xiang Founder Wang Guoyu: Running a restaurant requires understanding the economic cycle. Currently, 80% of expansion and new store openings are unprofitable.

How does the Kondratieff wave theory influence the strategic decision-making of restaurant businesses?

On March 24, the 2026 China Catering Industry Festival and the 35th HCC Global Catering Industry Expo, co-hosted by the World Federation of Chinese Catering Industry and Hongcan Network, kicked off at the Hangzhou International Exhibition Center.

At the “2026 China Catering Industry Conference,” Wang Guoyu, founder of Nanchengxiang, candidly stated that restaurant operators need to grasp the economic cycle and not engage in futile efforts. He mentioned the “Kondratieff wave” theory, which posits that there is a long-term fluctuation pattern of approximately 60 years in the economic development process. This fluctuation is not random and can be roughly categorized into periods of prosperity, recession, depression, and recovery.

Wang Guoyu believes that according to theoretical deductions, we are currently (2023-2026) in the depression phase of the Kondratieff wave, characterized by low growth and high deflationary stock competition. This means that the money businesses earn is no longer a premium brought about by economic growth, but rather taken from others’ pockets. Competition in this era will be more brutal than ever, with 80% of restaurant expansions resulting in losses, leading to the closure of many companies.

Furthermore, in the development process of restaurant businesses, it typically follows a ten-year cycle, adhering to the pattern of “7 years of explosive growth, followed by 3 years of transformation.” If a business remains stagnant during the necessary transformation period, it risks bankruptcy.

For restaurant operators, it is essential to grasp the gears of the cycle, hibernating in winter while waiting for the arrival of spring and preparing to sow seeds.

Taking Nanchengxiang as an example, in 2024, they proposed the “Brilliant Action,” aiming to transform the brand over three years. Since 2024, Nanchengxiang has not actively expanded its scale, maintaining around 200 stores, but has improved performance through store renovations.

On one hand, there is a transformation of personnel and organization at the backend. In the past two years, Nanchengxiang has established the 2.0 and 3.0 business units, formed a research and development center for product development and supply chain innovation, controlling production from the source. They have also promoted a “top leader project,” where team members actively understand the market, assess the future, and carry out reforms based on this insight.

On the other hand, there is the transformation of the storefronts. Currently, Nanchengxiang operates with a “dual model,” consisting of 2.0 stores transformed from older establishments and 3.0 stores upgraded to a self-service stir-fry model. These two models complement each other, contributing to the company’s profit growth.

Wang Guoyu concluded that in the future, the catering industry needs to continuously innovate, and this innovation must be sustainable. Innovation is real-time and should be comprehensively considered based on environmental changes, technological iterations, and business development.

Author: Hongcan Editorial Team