After Uber Eats announced plans in March to crack down on redundant and poorly rated virtual restaurant brands that are noncompliant with the aggregator’s rules, the company has begun to remove thousands of delivery-only restaurants from its marketplace. As first reported by Business Insider, since March, Uber has removed 8,000 restaurants from its system, many of which are duplicates of parent restaurants. The company said it will continue to monitor virtual brand rule-breakers moving forward.
“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,” John Mullenholz, US&C head of virtual restaurants and dark kitchens at Uber Eats said in a statement emailed to Nation’s Restaurant News. “We took care to introduce standards that let our restaurant partners continue to flex their creativity, as we know delivery-only concepts are an exciting way for operators to invest in the growth of their businesses.”
DoorDash and Grubhub have similarly put rules in place to clean out the ghost kitchen clutter from their virtual marketplaces. Since March 2021, virtual brands have been labeled as such on the DoorDash app, and Grubhub has had quality standards in place for virtual brands for years. DoorDash has also released and continues to update its app with standards virtual brands must meet, including a menu requirement of at least eight items, 50% differentiation from other menus at the same address, and 50% hot or prepared items (the latter of which include cold items like drinks and smoothies) to deter brands from selling packaged goods. Aggregators are also still dealing with issues of home cooks sneaking their non-commercial food onto apps like DoorDash, but they’re swiftly taken down as soon as they’re spotted.
Major virtual restaurant operators will likely not be affected by the escalating rules and crackdowns on illegitimate or redundant brands, and in fact—they might be a healthy next step for virtual brands as the industry evolves beyond the panic-driven flood of ghost kitchens that began during the pandemic. Kirk Mauriello, CEO and cofounder of ghost kitchen company Profit Cookers said that his brands are seeing an uptick in orders since the removal of noncompliant brands, which has increased the visibility of Profit Cookers’ brands like McLovin Chicken and Grilled Cheese Mania on the Uber Eats app.
“There were so many companies taking advantage of the consumer and of the Uber Eats platform,” Mauriello told Nation’s Restaurant News. “The app was getting way too crowded with brands that were subpar and in many cases just duplicates of the same food offerings but under different brand names. Something had to be done to begin to put some standards around what is considered a virtual brand. The initial standards are fair and we made a few adjustments to make sure all our brands were in compliance.”
One of Uber’s new rules, he added, might be challenging to comply with: the minimum number of orders of three per week that a virtual brand has to hit to stay on the Uber Eats platform. Mauriello said that this could be challenging for seasonal businesses like restaurants in college towns or on college campuses that slow down significantly when schools lets out.
The Uber Eats crackdown comes at a time of upheaval and uncertainty for the virtual restaurant industry. Last month, former virtual brand king Nextbite was sold off to former competitor SBE Hospitality Group’s CEO Sam Nazarian following multiple rounds of layoffs. Shortly after, YouTuber MrBeast, of MrBeast Burger fame, announced that he was stepping back from the wildly successful virtual brand in a series of now-deleted tweets.
Since then, Red Robin became the latest restaurant chain to announce a reassessment of ghost kitchen investment. According to Restaurant Dive, Red Robin has discontinued both its partnership with MrBeast Burger and its own virtual restaurant brands. Neither MrBeast Burger parent company Virtual Dining Concepts nor Red Robin responded in time to request for comment on the future of the brand.
While the fate virtual restaurants remains in flux, it’s quite possible that in the future, consumers will have fewer virtual brands to choose from and ghost kitchens will become yet again a more niche subsection of the restaurant industry instead of a cheaper way out of the brick and mortar investment.
Contact Joanna Fantozzi at [email protected]
