Chinese authorities have taken aim at a new target as they rein in the country's cut-throat food delivery industry: “ghost kitchens,” or restaurants that don't actually exist but appear on apps. The “ghost kitchens” outsource orders to third-party vendors, which fulfill them at lower costs, allowing merchants to push down prices and maximize profits, according to BBC. Authorities have found thousands of these “ghost kitchens” across China, raising concerns that the cheap prices are coming at the cost of food safety. Starting this week, apps must verify restaurants' licenses and addresses, while merchants must ensure the listing online matches the physical business and specify if it offers dine-in services. The scrutiny of “ghost kitchens” began last year, after a man in Beijing lodged a complaint over an unsatisfactory cake topped with inedible flowers. He had ordered it on a food delivery app, state media reported. Officials found that the cake chain he had ordered from listed nearly 380 locations on major e-commerce platforms but did not have a single physical store. Its online shops also allegedly used forged business licenses. As the investigation continued, it revealed that the chain accepted orders which were then transferred to a different platform - and that is where the orders were outsourced to various third-party vendors, depending on who had the lowest bid. Authorities found a total of 3.6 million cake orders across two order-transfer platforms, state news agency Xinhua reported last month. They also recorded 67,000 “ghost shops” across seven major food delivery apps, which together with the order-transfer sites “formed an illegal supply chain through mutual collusion,” according to Xinhua. Food delivery platforms were complicit in these arrangements, it added. “If we're too strict in our review, the merchants would go to other platforms,” a staff member from one delivery app reportedly told officials.
