To switch to production mode on Ubuntu 16.10 following is what I did and you can follow the thread below.
frappe@erpnext:~/frappe-bench$ sudo supervisorctl reload
Restarted supervisord
frappe@erpnext:~/frappe-bench$ sudo service nginx start
frappe@erpnext:~/frappe-bench$ sudo bench setup production [USERNAME]
supervisor.conf already exists and this will overwrite it. Do you want to continue? [y/N]: y
Port configuration list:
Site site1.local assigned port: 80
nginx.conf already exists and this will overwrite it. Do you want to continue? [y/N]: y
No config updates to processes
nginx: the configuration file /etc/nginx/nginx.conf syntax is ok
nginx: configuration file /etc/nginx/nginx.conf test is successful
frappe@erpnext:~/frappe-bench$