- Author:
- Eric Wu†, Vincent Lau†, Kane Wu, Colin Sheng, Uchenna Cyril Eze*
- Year:
- 2026
- Abstract:
- The growing centralization of food production has transformed restaurant operations, but its adoption is difficult to investigate because production arrangements are often unobservable to outsiders. This study examines the economic and institutional factors associated with restaurants' reliance on centralized production using a latent-variable approach. Building on the task-based framework, we propose that transferring culinary tasks from individual outlets to central kitchens or upstream suppliers reduces the relative demand for on-site culinary skills, making the chef-to-server wage ratio a potential indicator of hidden production arrangements. Using data from 311 restaurants across five Chinese cities, we estimate a Multiple Indicators Multiple Causes (MIMIC) model with the wage ratio and the proportion of negative reviews mentioning prepared meals as reflective indicators. Results show that centralized production reliance is negatively associated with the wage ratio and positively associated with commercial rent, chain scale, and restrictions on open-flame cooking. Robustness tests support these patterns. External validation further shows that restaurants with publicly documented centralized production have a significantly lower mean wage ratio than restaurants without such disclosures. These findings suggest that centralization reflects not only efficiency considerations but also local operating costs, institutional constraints, and the standardization requirements of chain expansion. The study also points out that opaque production practices in one market may be inferred from observable traces in an adjacent market.
Information
- Publish Name
- Vincent Lau
- Original Name
- Xincheng Liu 刘欣城
- Current Institution
- The Chinese University of Hong Kong, Shenzhen
Education
2025 ~ Now
The Chinese University of Hong Kong, Shenzhen
B.A. in Statistics & Economics
B.A. in Statistics & Economics
Biography
Vincent Lau, born Xincheng Liu, was born in Shenzhen, China, in 2007. He developed an interest in economics during high school. He majors in Statistics and minors in Economics at The Chinese University of Hong Kong, Shenzhen, with the ambition of pursuing a career in economic research.
Research Interests
- Institutional Economics
- Empirical Economics
- Labor Economics
Research & Publications
Working Papers
Work in Progress
- Author:
- Eric Wu†, Vincent Lau†, Uchenna Cyril Eze*
- Year:
- 2026