Eliza Wong
Executive Summary
Key developments in the XiBei pre-made dishes controversy:
– XiBei has suspended back kitchen tours nationwide after media scrutiny revealed operational challenges
– The specially created “Luo Yonghao套餐” (Luo Yonghao Set Menu) has been removed from most locations despite initial promotional efforts
– Health certificate requirements now mandatory for any back kitchen access, reflecting increased regulatory awareness
– Founder Jia Guolong (贾国龙) maintains denial of pre-made dishes usage while threatening legal action
– The incident highlights growing consumer sensitivity toward food transparency in China’s restaurant sector
Restaurant Giant Faces Transparency Test
China’s culinary landscape faced an unexpected shockwave this week as XiBei餐饮集团 (XiBei Catering Group), one of the nation’s most prominent restaurant chains, found itself at the center of a brewing storm regarding food preparation practices. The controversy emerged when technology entrepreneur and social media influencer Luo Yonghao (罗永浩) publicly accused the chain of extensively using pre-made dishes while charging premium prices, triggering immediate market reactions and operational changes across XiBei’s nationwide network.
The allegations come at a sensitive time for China’s food and beverage sector, which has been increasingly focused on transparency and quality assurance. For international investors monitoring Chinese consumer trends, this incident provides valuable insights into changing consumer expectations and the operational challenges facing restaurant chains scaling across China’s diverse markets.
Initial Allegations and Viral Impact
On September 10, Luo Yonghao launched his criticism via Weibo, stating that “西贝菜品几乎全是预制菜，价格昂贵且恶心” (XiBei’s dishes are almost entirely pre-made, expensive and disgusting). His post rapidly gained traction, accumulating thousands of comments and shares within hours. The timing proved particularly damaging, occurring during peak dining periods when consumer attention to food quality intensifies.
Market analysts note that such social media incidents can significantly impact restaurant valuations, particularly for chains like XiBei that have been considering expansion or potential public offerings. The immediate stock market reaction among publicly traded restaurant groups suggests investors remain nervous about similar allegations emerging across the sector.
Operational Response and Kitchen Access Changes
XiBei’s management moved quickly to address the growing controversy, implementing operational changes that reveal both the company’s crisis management approach and the practical challenges of maintaining transparency in large-scale food service operations. By September 12, the company announced it would open all 370+ locations’ back kitchens for public inspection, a remarkable commitment to transparency that nonetheless created new operational complexities.
Kitchen Access Suspension Implementation
By September 14, the company had reversed its open kitchen policy, implementing a nationwide suspension of back kitchen visits. According to customer service representatives who spoke to Jimu News reporters, the decision resulted from multiple factors: operational disruptions during peak service hours, customer complaints about privacy violations during media filming, and concerns about maintaining food safety standards with increased non-staff movement in preparation areas.
The company clarified that while back kitchen access is temporarily suspended, customers can still observe cooking processes through transparent display kitchens (明档) present in most locations. This compromise attempts to balance transparency concerns with practical operational requirements during busy service periods.
Health Certificate Requirements
For media organizations and potentially other interested parties, XiBei has established new protocols requiring health certificates (健康证) for any back kitchen access. This requirement aligns with China’s food safety regulations but represents a significant barrier to spontaneous inspections or visits. The Zhengzhou Zhongyuan District location specifically indicated that visits might be possible on weekdays with advance consultation, suggesting a more structured approach to transparency moving forward.
The Luo Yonghao Menu: Marketing Strategy and Rapid Retreat
In one of the more unusual marketing responses to criticism, XiBei briefly embraced the controversy by creating a special “罗永浩套餐” (Luo Yonghao Set Menu) across its locations. Priced at 587 RMB for 12 dishes, the menu specifically featured items that Luo had referenced in his original criticism, effectively turning the allegation into a promotional opportunity.
Menu Composition and Pricing Strategy
The special menu’s composition and pricing provide interesting insights into XiBei’s positioning strategy. At approximately 49 RMB per dish, the pricing falls within XiBei’s premium positioning but raised questions among consumers about value proposition, particularly regarding the pre-made dishes controversy. The missing beef dish mentioned in some locations further complicated the messaging around consistency and quality control.
Rapid Menu Withdrawal
Within days of its introduction, the Luo Yonghao menu disappeared from most locations. Customer service representatives confirmed the special menu had been “下架” (removed from shelves), though component dishes remain available individually. The rapid introduction and withdrawal suggest both responsiveness to market feedback and potential internal disagreements about how to address the controversy through menu engineering.
Leadership Response and Legal Threats
The corporate response to the controversy revealed much about XiBei’s crisis management approach and the personal investment of its leadership in brand protection. Founder Jia Guolong (贾国龙) personally entered the fray on September 11, directly contradicting Luo’s allegations and threatening legal action against the influencer.
Founder’s Strong Denial
Jia’s vehement denial of pre-made dishes usage underscores the sensitivity around food quality allegations in China’s competitive restaurant market. His statement emphasized the company’s commitment to fresh preparation and traditional cooking methods, positioning XiBei against the growing trend of pre-made meal solutions that have gained popularity during and post-pandemic.
Legal Posturing and Public Relations
The legal threats against Luo Yonghao represent a aggressive stance toward influencer criticism, particularly noteworthy given Luo’s substantial following and reputation for authenticity. Legal experts suggest that such cases would face challenges in Chinese courts, particularly regarding the definition of “pre-made dishes” and the burden of proof regarding food preparation methods.
Broader Market Implications
Beyond the immediate operational impacts, the XiBei pre-made dishes controversy offers important insights into the evolving Chinese restaurant sector and investment considerations for international observers monitoring China’s consumer markets.
Consumer Transparency Demands
The incident highlights growing consumer demand for transparency in food sourcing and preparation. Similar trends have emerged globally, but China’s rapid urbanization and frequent food safety incidents have created particularly strong consumer interest in food provenance. Restaurants chains that can demonstrate supply chain transparency may gain competitive advantages, while those resisting increased scrutiny face growing reputation risks.
Operational Scaling Challenges
For investors analyzing restaurant chains, the controversy underscores the tension between operational standardization required for scaling and consumer expectations of fresh preparation. Central kitchen models that improve consistency and cost control simultaneously create vulnerability to allegations of diminished quality or authenticity—particularly problematic for brands like XiBei that built their reputation on traditional cooking methods.
Regulatory Environment Considerations
As Luo Yonghao himself noted in his concluding comments, the incident highlights the need for clearer regulatory frameworks around pre-made dishes definition and labeling. China’s regulatory bodies including 国家市场监督管理总局 (State Administration for Market Regulation) have been gradually addressing these issues, but the XiBei situation demonstrates how consumer expectations are evolving faster than regulatory frameworks.
Investment Perspective and Sector Impact
From an investment standpoint, the XiBei situation offers several important considerations for analysts monitoring China’s consumer sector. Restaurant chains face increasing scrutiny around operational transparency, particularly as social media amplifies individual criticisms into broader market concerns.
The company’s response—alternating between transparency initiatives and operational restrictions—reflects the challenging balance between marketing needs and practical operational constraints. For investors, the key considerations include brand resilience reputation management capabilities, and adaptability to changing consumer expectations around food transparency.
The rapid spread of the controversy also highlights the growing influence of social media influencers on consumer brands in China. Companies must now factor influencer relations into their risk management strategies, particularly when influencers like Luo Yonghao have established credibility regarding product quality assessments.
Moving Forward: Lessons for Restaurant Sector
The XiBei pre-made dishes controversy provides valuable lessons for restaurant operators and investors alike. Transparency initiatives must be carefully planned to ensure operational feasibility, while marketing responses to criticism require strategic consistency rather than reactive position changes.
For the broader restaurant sector, the incident underscores the need for clearer communication around food preparation methods and potentially industry-wide standards for defining and labeling pre-made components. Companies that proactively address these transparency demands may gain competitive advantages as consumer expectations continue evolving.
The situation remains fluid, with potential legal developments and further operational adjustments likely. International investors should monitor how XiBei manages the longer-term reputation impact and whether the incident triggers broader industry moves toward standardized transparency practices. Those considering investments in China’s restaurant sector should pay particular attention to how companies balance operational efficiency with quality perception management in an era of increased social media scrutiny.
For ongoing developments regarding China’s restaurant sector and investment implications, monitor regulatory announcements from 国家市场监督管理总局 (State Administration for Market Regulation) and industry responses to changing consumer expectations around food transparency and quality assurance.
