Source: iStock | ampueroleonardo
Uber Eats is Purging 5,000 Ghost Kitchens
Uber Eats is purging 5,000 ghost kitchens from its app and setting stricter rules for the remaining ones after finding its platform flooded by virtual restaurants listing similar food options under different names.
“Diners are effectively seeing 12 versions of the same menu on the app. It’s fair to say that kind of erodes consumer confidence,” John Mullenholz, head of dark kitchens at Uber Eats, told The Wall Street Journal.
Uber Eats’ new guidelines require virtual locations to have menu items “at least 60 percent different” from any other online restaurants operating from the same location. The ghost kitchen and its parent restaurant must maintain a 4.3-star rating or higher on the app, have five percent or fewer orders that they have canceled and have a five percent or lower inaccurate orders rate.
The New York Post found one deli in the Yorkville section of Manhattan operating 27 different online restaurants across third-party delivery apps, many with similar menus but different prices.
For food establishments, having an excessive number of virtual restaurants operating from the same kitchen decreases the overall level of competition.
Consumers may face health risks since it’s not as easy to learn whether a virtual vendor is in compliance with inspections. Consumers may also find it deceptive not knowing where their food is being made. They may also feel duped in finding out their virtual gourmet sandwich shop order came from a pizza place, convenience store or chain restaurant.
Virtual kitchens served as replacements for indoor dining during the early stages of the pandemic and are still being touted by the delivery apps and logistics providers in the space as a way for restaurants to drive extra revenue streams and optimize existing operations despite the post-pandemic slowdown in online delivery.
Rishi Nigam, CEO of Atlanta-based Franklin Junction, which sets up more established brands such as Hooters, Nathan’s and Arthur Treacher’s Fish & Chips as virtual brands, told QSR Magazine, “There’s a lot happening in the industry now including relaxing of pandemic restrictions and inflation, but we see the convenience of digital ordering, delivery and pickup to be long-term shifts.”
Discussion Questions
DISCUSSION QUESTIONS: Does Uber Eats’ move to eliminate redundant and poorly rated virtual brands say anything about the challenges or complexities around ghost kitchens? Has the ghost kitchen model been validated over the course of the pandemic?
Poll
Loading …BrainTrust
DeAnn Campbell
Head of Retail Insights, AAG Consulting Group
Ananda Chakravarty
Vice President, Research at IDC
There’s a lot of trust people put into the digital tools. I can visualize situations where someone puts up a menu at slightly higher price points than restaurants in an area, but broader quantity, and then goes out and purchases the product from the local restaurants, with some simple repackaging runs a business without actually making food. Is this legal? Probably not. Vetting the ghost kitchens should be standard quality control for Uber Eats and it’s surprising that they’ve taken so long to tackle it. Legitimate ghost kitchens that deliver on excellent food lose out.
Vetting? I wonder if the delivery companies really care about food.
In the long run, ghost kitchens may be the only way to make the economics of delivery work. In previous discussions here, many colleagues have questioned how the economics work for the restaurants (or the drivers, for that matter.) T%his chart from the Washington Post confirms that posit. https://www.washingtonpost.com/technology/interactive/2023/delivery-app-doordash-grubhub-ubereats/?itid=lk_interstitial_manual_10
The future? Virtual kitchens may be the only way the economics of delivery work. Will we have a bifurcated industry, where virtual kitchens fill the delivery niche and real restaurants only serve dining in and pick-up?
When ordering, there is nothing more infuriating than seeing 12 versions of the same menu. It feels just like ordering food at Newark airport – where the same kitchen is making the same low quality food for several establishments. I’ve taken to only ordering from restaurants on Uber Eats where I can find in-person dining reviews online.
It’s a smart move that accomplishes a number of important things. It shows support to a smaller pool of better businesses who stand to make more money by not having so much competition. That added revenue can help them funnel dollars into maintaining high quality, better staff and new product creation. For the customer it not only signals that Uber is trustworthy, but it reduces choice overload so they feel more satisfied with their decisions, and more likely to become habitual customers. And as an added perk, it also reduces Uber’s liability should someone actually get sick from bad food. Hopefully this will help the ghost kitchen business pull up its socks. It’s a good idea but has gone off the rails from lack of oversight and accountability.
Consumers are smarter than companies think and when they see the exact same menu item word for word across different restaurants in the same geography, they know something is not quite right resulting in a loss of trust. As its name states, Uber Eats provides food conveniently. But so does many other companies. They got it right by removing the vagueness and uncertainty of these redundant sites and sites with poor feedback.
But what can they do to generate more trust? Ghost kitchens may not necessarily be completely anonymous. Should they be more forthright with their information and perhaps provide a zip+4 location of the ghost kitchen and even some pictures? I personally want to know where my food comes from and more transparency may motivate me to buy from these delivery sites. My bet is that I am not alone in this perspective.
It says(to me) that they have standards and are exercising quality control…good!
As for the more general issues – and, really, the listing came across like a complaint in some catch-all lawsuit : yes, you do give up some things in a virtual/online world. Some people don’t like that, some don’t care. At the moment I don’t think it’s really a problem since people have choices. If – when? – the online world forces traditional retailers out of business we’ll have to reassess those concerns.