Outsourcing in the Chinese Restaurant Industry

One set ready to use

One set ready to use

It is hardly a secret that division of labor and specialization are important keys to economic efficiency.

The Chinese restaurant industry must surely count as a world leader in this regard. These days the vast majority of restaurants, including the mom-and-pop 餐厅 where two people can expect to eat well for 50 RMB or less, outsource a substantial portion of their dishwashing to third party companies. Used plates, cups and spoons go into bins, which are then put outside and picked up by the outsourcing partner. Everything is washed, sanitized, repacked in plastic and the same quantity returned to the restaurant. While I don’t know the details, it seems probable that many of these third party partners are also effectively leasing the required items to the restaurants.

This is nothing special in China; in fact, this has been going on for years. However, I have yet to observe such an industry anywhere else. It seems to me that this approach would be viable in any urban area with a substantial concentration of restaurants in a relatively small area. Perhaps an opportunity for entrepreneurs in the rest of the world to learn from the Chinese model?

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3 Responses to Outsourcing in the Chinese Restaurant Industry

  1. bradwww says:

    dishwashing machines are pretty common and cheap in the USA, i don’t know if the delivery costs could work in anywhere but a very dense area. plus all of the restaurants would need to use identical plates.

    • Shanghai Observer says:

      That does seem to be what is going on. At least in two cases I confirmed that all those plates, cups and spoons belong to the washing company. I guess that in most cases all restaurants sharing a washing company also share the same set. This is turn provides companies selling such implements with a bunch of large customers instead of countless small ones.

  2. bradwww says:

    however, sysco comes to mind as a company in the USA which delivers the guts of most dining establishments in the USA – supplies, silverware, plates, condiments, sides, frozen foods, vegetables, etc. basically a restaurant in a box. make one dish and they will deliver everything else.

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