China Cracks Down on Ghost Kitchens in Food Delivery Industry
Saturday, 2026/06/06220 words3 minutes2673 reads
Chinese authorities have intensified their scrutiny of the country's cutthroat food delivery industry by targeting "ghost kitchens" - restaurants that exist solely on delivery platforms without corresponding physical establishments. These operations outsource orders to third-party vendors who fulfill them at reduced costs, enabling merchants to undercut competitors while maximizing profit margins, albeit at the potential expense of food safety standards.
The crackdown commenced following a complaint from a Beijing resident regarding a cake adorned with inedible flowers. Investigators discovered that the implicated cake chain maintained nearly 380 listings across major e-commerce platforms while operating zero physical stores, allegedly utilizing forged business licenses. Further investigation revealed a sophisticated network where orders were transferred to secondary platforms and subsequently outsourced to the lowest bidding vendors.
Authorities identified 67,000 ghost shops across seven major delivery apps and documented 3.6 million cake orders through two order-transfer platforms. These entities collectively formed what Xinhua characterized as "an illegal supply chain through mutual collusion." Delivery platforms were found complicit, with one staff member admitting that stringent reviews would drive merchants to competitors.
New regulations mandate that apps verify restaurants' licenses and addresses, while merchants must ensure online listings accurately reflect physical operations. In response, some establishments have implemented transparent kitchens with live-streaming capabilities, and Anhui province has enlisted delivery riders as whistleblowers to report illegal operations.
