SHANGHAI—In China, dining culture has long been associated with freshly cooked meals. But a public spat between a celebrity entrepreneur and a popular restaurant chain has pushed the term “prepared food” — long a niche in the cold-chain industry — into the national spotlight.

On Sept. 10, Luo Yonghao, a well-known entrepreneur and online personality, took to social media to accuse Xibei Youmian Village, a nationwide restaurant chain, of serving “almost nothing but prepared food, at high prices.” The claim spread rapidly online, prompting founder Jia Guolong to issue a forceful rebuttal, insisting “Xibei does not serve a single prepared dish” and threatening to sue Luo.

In a market where consumer trust has been tested repeatedly, the dispute has become more than a personal quarrel. It has laid bare the tension between efficiency and transparency in China’s restaurant industry, and underscored growing demands from diners for clearer labeling and greater disclosure.

Luo’s criticism tapped into a central concern: whether restaurants are obligated to tell customers how their dishes are prepared. On his social media accounts, he stressed he was not opposed to prepared food itself but to the lack of transparency. “Consumers have suffered from the opacity of prepared foods for too long,” he wrote, later offering a 100,000-yuan reward for evidence that Xibei outlets used prepared dishes.

Xibei pushed back quickly. The company said its bone broth is made fresh daily and its hand-rolled noodles are prepared in-store, denying that meals are mass-produced and frozen. Jia went further, disclosing details of Luo’s dining experience to show his accusations were unfounded.

The clash raised thorny legal questions: Where should the line be drawn between a consumer’s right to voice opinions and a business’s right to protect its reputation? Legal experts note that Luo’s statement that “almost all” dishes were prepared could amount to defamation if proven false, while calling the food “expensive” or “disgusting” is protected as subjective opinion.

At the heart of the controversy lies a definitional puzzle: what exactly counts as prepared food? In 2024, China’s market regulators issued a national definition for the first time. To qualify, a product must combine two traits — it must be “pre-prepared” and it must be a “dish.” The definition limits the category to prepackaged meals made from agricultural products, processed on an industrial scale, and ready to eat after heating or minimal cooking.

But the exemptions are equally contentious. Food made in central kitchens or vegetables simply washed and cut for convenience are excluded from the definition. That ambiguity gives restaurants room to argue they don’t serve prepared food, blurring the line between transparency and misrepresentation.

Consumer unease is widespread. A 2022 survey by the Jiangsu Consumer Council found nearly 30% of respondents worried about the safety of prepared dishes, citing concerns over freshness and hygiene. More than 60% said the taste fell short of freshly cooked meals, while some complained that prepared items weren’t clearly labeled, leaving them unsure what they were eating.

With labor and ingredient costs climbing, reliance on prepared foods is rising among restaurants. For large chains, they offer efficiency and consistency. For diners, however, they can be seen as cutting corners — charging full price for what feels like a shortcut. That perception gap has turned prepared food into an easy target for criticism.

The uproar has already accelerated regulatory action. China’s National Health Commission is leading efforts to draft the country’s first national safety standards for prepared foods, which would impose stricter requirements on ingredients, processing methods, additives and labeling. If adopted, the rules would create a nationwide baseline for the industry.

Markets have taken a surprisingly optimistic view. Despite public backlash, China’s “prepared food concept index” rose nearly 1% during the dispute, with shares of several related companies climbing. Investors appear to be betting that clearer regulations will favor established players with scale, even as smaller operators get squeezed out.

The episode highlights a fundamental cultural divide. In Western markets, frozen or ready-made foods are widely accepted. In China, where dining carries strong cultural and social significance, consumers place high value on craftsmanship and the sense of freshness. Bridging that cultural gap may prove harder than building supply chains or writing regulations.