Which (food) licenses for your business model?

Different food businesses need different licenses.

 While this may seem obvious, a closer look to the food license regulation will tell us that understanding which license is right for our business model can be a little more complicated…

Production, sale and food service 

From legal perspective, food operations are classified into food production and food operation (which in its turn includes food sale and food service).

Food production concerns food factories, and refers to 32 sub-categories, each one regulated by specific regulations and standards.

Food operation license applies instead to both restaurants and food sellers; such license exists since 2015, and replaces the former food distribution license and food catering license. For this reasons, the new food operation license includes a great number of subcategories and is applicable to a great variety of business models.

• Food operation license in fact covers:
• Food sellers;
• Food service operators, providing ready-to-eat food made on site to consumers;
• Canteens serving food to internal staff/members of a specific unit (company, school, government office, etc..).

Each of these three main categories has various sub-categories: for instance, food sellers include supermarkets, stores, stalls-at-market, automatic machine vendors, etc..; food service operators include restaurants (extra-large, large, medium and small), drink shops, dessert station, central kitchen, sellers of made-on-site food, etc..

Each food license – whether for sale, food service or canteen – is then granted with referral to specific categories of products. For instance, food sale usually refers to either pre-packaged food products or bulk products (i.e. products sold by their weight, without being prepackaged in advance); sale of health food and special dietary or medical purpose foods requires a specific license as well. Main subcategories for food service usually refer to hot food (i.e. restaurants serving cooked food), cold food, pastry, uncooked food, drinks.

Finally, not all food products are available for any licenses: for example, centralized kitchen are only allowed to prepare food on a specific “white” list (which does not include, for example, raw meat or raw seafood, sushi, cold cakes, etc..).

Cooking food and selling it: does it imply production license?

Food businesses that cook on-site, provide consumers with ready-to-eat products but do not provide space for consumption in their retail store belong to the category of the onsite-made-and-sold food (现制现售). This is actually something in-between food sale and catering, and in fact – depending on which specific food are going to be served through this model – this specific category can be available to only sellers or caterers, or to both.

Similar to centralized kitchen, also onsite-made-and-sold food is only allowed for specific food products on a positive list.

Who can I legally sell to?

This mainly depends on the business scope as defined on the business license, which shall be duly reflected on the food operation (or production) license.

On principle, food service operators can only serve customers ordering food at the store or online, while food sellers can enjoy a wider range of operations: retailers are allowed to sell to end-users (restaurants, consumers coming at the store or ordering online – if online sale is mentioned on the license); wholesalers can also supply other traders (such as other wholesalers, or retailers).

Despite the very high number of definitions provided in the applicable regulations (somewhat unusual for Chinese regulations), some key points are still not explicitly defined in the law – for example, the exact boundaries between food production (食品生产) and food cooking-and-selling (食品制售), or between light/preliminary process of edible agricultural products and/or bulk food and production or cooking. As always in China, regulation knowledge, experience accumulated in previous similar cases and a good dialogue with in-charge authorities are necessary ingredients to get the most realistic full picture.

From a general overview of the regulation, the most interesting part – in our opinion – is that the great number of categories and sub-categories that these food licenses are articulated into (all in all, we counted around 150 of those!) allows an amazing flexibility to match – as much as possible – any possible business model.

Just to make a very basic example, a same product (such as pizza) can be sold under a food selling license (for example, pre-packaged frozen pizzas sold in supermarkets), under a restaurant catering license (for examples, a traditional pizzeria, cooking the pizza onsite and providing tables to consumers for consumption), under an onsite-made-and-sold food depending (if pizza is made onsite but there are no tables/spaces for consumers to eat it), or even in a retail location gathering all these licenses.