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China targets 'ghost kitchens' in food delivery crackdown
Chinese regulators have intensified scrutiny of so-called 'ghost kitchens'-virtual restaurants that exist only on food delivery apps but lack physical premises. Authorities aim to curb food safety risks and unfair competition in the country's fiercely competitive delivery market.
Regulatory measures take effect
Starting this week, food delivery platforms must verify restaurant licenses and physical addresses before listing them. Merchants are now required to ensure their online listings match their actual operations and must specify whether dine-in services are available.
The crackdown follows a 2025 complaint in Beijing, where a customer received a cake topped with inedible flowers. Investigators discovered the cake chain had nearly 380 virtual locations but no physical stores, using forged licenses to operate.
Scale of the problem revealed
State media reported that authorities identified 3.6 million cake orders processed through two order-transfer platforms, where orders were outsourced to third-party vendors based on the lowest bid. Additionally, 67,000 'ghost shops' were found across seven major food delivery apps, forming an illegal supply chain through collusion.
"If we're too strict in our review, merchants would migrate to other platforms," a delivery app employee told officials, highlighting industry pressure to retain business.
Industry-wide impact
In April, the State Administration for Market Regulation fined seven e-commerce platforms, including Meituan, JD.com, and Pinduoduo, a combined 3.6 billion yuan ($530 million) for enabling 'ghost kitchens.' The penalties reflect broader concerns about a race to the bottom in delivery pricing, which has also led to exploitative conditions for riders.
Consumer safety initiatives
To rebuild trust, over 20 takeout stalls in Hangzhou have installed 'transparent kitchens' with live-streaming features, allowing customers to monitor food preparation in real time. Meanwhile, Anhui province signed a food safety agreement with Meituan, Taobao, and JD.com, incorporating AI monitoring and incentives for delivery riders to report illegal operations.
What's next
Regulators are expected to expand enforcement, with further inspections and potential penalties for non-compliant platforms. The crackdown underscores Beijing's determination to balance market competition with consumer protection in the rapidly evolving food delivery sector.
