Eliza Wong
Executive Summary
- Xibei’s requirement for health certificates to visit kitchens sparks nationwide debate about food transparency
- Pre-made food sector shows market resilience with concept stocks rising 0.99% despite controversy
- National pre-made food safety standards draft completed, awaiting public consultation
- Consumer expectations clash with industry operational realities in China’s catering sector
- Market leaders like老乡鸡 demonstrate successful transparency models amid industry scrutiny
The Kitchen Access Policy That Ignited a National Conversation
The ongoing dispute between Luo Yonghao and Xibei took a dramatic turn when Xibei founder Jia Guolong’s private comments labeling Luo as an “internet troll” surfaced online. This escalation prompted Luo to declare the matter irreconcilable, stating: “Jia Guolong, we cannot let this matter pass. Friends who try to mediate between us, we will cut ties.” The conflict has brought unprecedented attention to kitchen transparency practices across China’s restaurant industry.
Xibei’s subsequent apology acknowledged significant gaps between their production processes and customer expectations. The company committed to adjusting central kitchen pre-processing to onsite restaurant preparation where possible. However, Luo Yonghao remained unsatisfied, even cautioning respected entrepreneur Yu Donglai of Pang Donglai against involvement, noting that the person most damaging to Xibei appeared to be founder Jia himself.
Health Certificate Requirement for Kitchen Visits
During evening dinner service on September 14, First Financial reporters observed noticeably fewer customers at multiple Xibei locations. Staff acknowledged the pre-made food controversy had significantly reduced recent patronage. When journalists requested kitchen access, they encountered a new policy: visitors must provide health certificates and personal information because “the kitchen is a restricted area where safety comes first.”
The semi-open kitchen design allowed peripheral observation, where reporters noted minimal food preparation activity due to reduced customer traffic. Staff insisted they don’t use pre-made food, instead cooking with fresh ingredients delivered daily. This kitchen access policy requiring health certificates has become a focal point in the transparency debate surrounding China’s restaurant industry.
Comparative Restaurant Transparency Practices
The same investigation revealed different approaches across the industry. At Shanghai’s Gui Man Lou restaurant, staff denied using pre-made food while demonstrating fresh vegetable cooking in their open kitchen. Similarly, Su Xiao Liu showcased transparent dumpling preparation with chefs visibly making and steaming buns onsite.
老乡鸡’s Transparency Model
Luo Yonghao notably praised老乡鸡 for their transparent approach to pre-made food disclosure. First Financial journalists confirmed the presence of clear “菜品加工等级划分公示牌” (food preparation classification notice boards) at老乡鸡 locations. These displays use color-coded system: green for restaurant-prepared (fresh/cut/mixed), yellow for semi-pre-made (central kitchen/external procurement), and red for reheated pre-made (central kitchen pre-made).
During lunch hours on September 15, Shanghai老乡鸡 locations experienced overwhelming business with customers queuing. Staff reported estimated 10-20% traffic increase following the pre-made food controversy, noting that while individual store performance varied, their location had seen exceptionally high customer volume recently. Multiple follow-up visits confirmed consistently strong business across their locations.
Defining Pre-Made Food: Consumer vs Regulatory Perspectives
Luo Yonghao clarified that his opposition isn’t to pre-made food itself but to concealment and excessive pricing. He emphasized that clearly labeled pre-made food at appropriate prices is acceptable, while high-priced pre-made dishes presented as fresh constitute deception.
The Regulatory Definition
The fundamental conflict stems from differing understandings of pre-made food. Consumers often consider pre-cut washed ingredients, dishes lacking wok hei (breath of wok), or overnight food as pre-made. However, the 2024 joint notification from six ministries including State Administration for Market Regulation provides precise definition.
According to the “关于加强预制菜食品安全监管 促进产业高质量发展的通知” (Notification on Strengthening Pre-made Food Safety Supervision and Promoting High-Quality Industry Development), the following do NOT qualify as pre-made food: simply processed unpacked vegetables (washed/peeled/cut); frozen rice products, convenience foods, boxed meals, steamed buns, pastries, bread, hamburgers, sandwiches, pizza and other staple products; ready-to-eat foods requiring no heating; vegetable/fruit salads; and central kitchen-prepared items distributed to affiliated restaurants.
Industry Perspectives on Central Kitchen Operations
Central kitchen models have become industry standard for chain restaurants. Zhu Guo, operating 30 restaurants, explained practical realities: “Shopping malls prohibit open flames, and most mall restaurants are chains. Brands with multiple locations establish central kitchens and supply chains to handle rough processing, then uniformly distribute to stores.”
This approach improves kitchen efficiency, reduces waste through accurate sales forecasting, and enables precision standardization—particularly for hot pot restaurants where ingredients arrive pre-portioned to gram-specific measurements, sometimes eliminating even washing preparation at restaurant level.
Quality Spectrum in Pre-Made Food
Zhu Guo distinguishes between preparation levels: “Various dishes have different pre-made degrees. Some involve completely pre-cooked ingredients requiring only heating—this type I personally reject as it feels like eating leftovers.” He believes fresh-locked ingredients processed onsite shouldn’t be rejected, while heat-and-serve products raise health concerns.
Wang Linjun shares similar perspective, noting that output stability requires chain stores to source from central kitchens with unified distribution. He acknowledges the subjective nature of the issue while recognizing consumer benefits from accelerated pre-made food legislation.
Market Response and Investment Implications
Surprisingly, the controversy hasn’t significantly impacted pre-made food sector stocks. On September 15, pre-made food concept stocks initially strengthened with sector rising 0.99% according to Tonghuashun data.
Sector Performance Highlights
Delisi (002330.SZ) and Sanjiang Shopping (601116.SH) hit daily limit gains, while Huifa Food (603536.SH), Weizhixiang (605089.SH), Guolian Aquatic (300094.SZ), Qianwei Central Kitchen (001215.SZ), and Gaishi Food (836826.BJ) all posted gains. This market resilience suggests investor confidence in the sector’s long-term prospects despite short-term controversies.
Weizhixiang Chairman and General Manager夏靖 (Xia Jing) previously acknowledged at earnings conference that the pre-made food industry faces both prosperity and challenges. While market scale grows rapidly, consumer demand diversification and intensified competition present higher requirements. The industry also confronts inconsistent standards, food safety concerns, and regulatory issues—though emerging standards should ultimately benefit quality brands in consumer selection.
Regulatory Developments and Future Outlook
The National Health Commission’s “预制菜食品安全国家标准” (Pre-made Food Safety National Standard) draft has completed review and will soon solicit public opinion. This will establish unified definition for pre-made food “identity” and首次 (for the first time) incorporate whether and how restaurants use pre-made food into information disclosure范畴 (scope).
Industry Adaptation Strategies
Qianwei Central Kitchen responded to investor concerns about public trust crisis by emphasizing their deep understanding and high regard for current market challenges. Their comprehensive response measures include stringent source control and supply chain upgrades, prioritizing stable raw material supply and exceptional quality, plus establishing严密 (strict) quality monitoring systems with specific quality management institutions for different business segments.
Experts suggest mandatory disclosure of pre-made food usage information, aligning with global transparency trends in food service industries. This approach balances operational practicalities with consumer right-to-know expectations.
Navigating China’s Evolving Food Transparency Landscape
The Xibei kitchen access policy requiring health certificates has accelerated national conversation about food transparency in China’s rapidly growing catering industry. While operational realities necessitate some pre-preparation for chain restaurants, consumer expectations increasingly demand clarity about food origins and preparation methods.
The market has demonstrated resilience with pre-made food sector stocks maintaining strength despite controversy. Industry leaders like老乡鸡 show transparency models can build rather than diminish consumer trust. With national standards imminent and regulatory framework developing, China’s food service industry stands at a transparency inflection point.
Investors should monitor companies demonstrating adaptive transparency practices and robust quality control systems. The coming standardization will likely separate industry leaders from followers, creating opportunities for brands that embrace rather than resist the transparency movement. As China’s culinary landscape evolves, those prioritizing clear communication and quality assurance will likely emerge strongest in the new transparency-driven market environment.
