Uber Eats Is Wiping Out 5,000 Vendors Known As 'Ghost Kitchens'. Here's Why Your Favorite Delivery Joint Could Be Axed Next. Uber Eats currently has an estimated 40,000 ghost kitchens listed on its app.
By Emily Rella
Opinions expressed by Entrepreneur contributors are their own.
If you've ever perused Uber Eats late on a lazy afternoon, you've most likely come across establishments that you've never seen in real life — and that's because many don't actually exist. These businesses operate out of "ghost kitchens." (On the flip side, seeing a place in real life that you've mysteriously ordered from on a food delivery app can feel like watching a dog walk on its hind legs.)
Ghost kitchens are virtual restaurants that don't actually have a physical storefront and can be run out of anywhere. Or, sometimes, it's a chain that you're already familiar with operating a delivery service under a different name and making a profit through separate branding through food delivery services. For example, you might be ordering dinner from "Joe's Wing Shop" on Uber Eats but in reality, you're ordering from Applebee's down the block.
Now, Uber Eats is trying to crack down on these operations. The Wall Street Journal reported on Monday that the company is trying to clean up overcrowded "virtual" restaurants from its database.
The delivery service platform is set to remove 5,000 "ghost kitchens," which account for roughly 13% of the app's businesses in North America, per WSJ.
WSJ reported that Uber Eats currently has an estimated 40,000 ghost kitchens on its app (about 8% of total Uber eats restaurants in the U.S.). In 2021, before the pandemic limited in-person dining and ordering out became the norm, roughly 10,000 were registered.
Many have taken to social media to talk about the influx of ghost kitchens that have crept up on the platform. One TikToker, for example, pointed out how she discovered she had "catfished" by virtual restaurants by searching their locations on a map.
@katiemarble Did anyone else not know this was a thing?? #ghostkitchens #grandrapids #restaurants #catfish #ubereats #convictionchicken #michigan #falseadvertising #greenscreen ♬ original sound - Katie Marble
"If you're craving a sandwich, there's the Meltdown," she says, pointing to the restaurant name indicated by the Uber eats listing, before switching the screen to show the address provided on Apple Maps. "Which is actually Denny's."
John Mullenholz, Head of Dark Kitchens (aka virtual restaurants) at Uber Eats, told WSJ that the landscape for ghost kitchens on food delivery apps has become similar to the "Wild West," and it's difficult to regulate online storefronts and duplicate kitchens on the backend.
"It's fair to say that kind of erodes consumer confidence," he told the outlet.
Uber Eats plans to tighten its guidelines this week. Virtual restaurants working in the same kitchen must have a menu at least 50% different from others to stay on the app, including showing five photos to users.
Ghost kitchens that drop below 4.3 out of 5 stars, as rated by customers, will also be on the chopping block.
"Communicating — and beginning to enforce — these new quality standards for Virtual Restaurants on Uber Eats is an important step for our program, designed to benefit both consumers and merchants," Mullenholz told The Verge in a statement.
Uber, which owns Uber Eats, was down just over 12.7% in a one-year period as of Tuesday afternoon.
