UberEats to remove 5,000 virtual brands to upgrade the app

UberEats is planning to remove thousands of online-only brands across North America from the app this week over concerns that restaurants offering multiple delivery options are cluttering the app with identical menus.

The 5,000 virtual brands — delivery businesses without physical storefronts – consist of around 13% of online storefronts in North America, mushrooming during the pandemic for eateries who used their empty kitchens and idle staff to test new ideas and make up for lost sales, The Wall Street Journal reported. 

The number of virtual brands on UberEats quadrupled to more than 40,000 this year from over 10,000 in 2021. They now account for 8% of the company’s storefronts listed in the US and Canada but less than 2% of bookings in the region.

The crackdown targets many online-only brands with duplicate menus while keeping the parent restaurant on the app, said John Mullenholz, who oversees virtual restaurant and dark kitchens efforts across North America. 

With new regulations announced on Tuesday, existing storefronts are required to have menu items that are at least 60% different from their parent restaurant menu and any other virtual brands. They are also expected to maintain a rating of at least 4.3 stars, with 5% or fewer orders canceled by the merchant and a low rate of inaccurate orders, a higher bar than physical restaurants, The Post learned. 

This move is to give merchants a fair shot at user attention, and promotes quality over quantity to provide the best options for users, UberEats told The Post on Monday. 

Among the brands scheduled for removal are 12 virtual brands selling identical breakfast burritos from a Colorado sports bar, 14 brands serving the same sandwiches from a New York City deli, and multiple online-only options from a San Francisco-based Pakistani restaurant that once replicated its menu up to 20 times. The delivery titan declined to disclose brand names to the Journal.

The eruption of unregulated online storefronts led too many eateries to compete for a position on apps, creating a “Wild West, anything goes kind of situation,” said John Mullenholz, who oversees virtual restaurant and dark kitchens efforts across North America. 

Diners are “effectively seeing 12 versions of the same menu” on the app, he said. “It’s fair to say that kind of erodes consumer confidence.” 

Ordering on the apps can now be intimidating, said Sam Brown, a 22-year-old New York City student.

“The other day I typed breakfast and literally had like 20 restaurants with the same menu blow up in my face,” he said. He visited a Starbucks instead.

While certain restaurants may list various brands with identical menus in an attempt to manipulate search results, others are using this tactic to attract customers’ attention.

An Indian restaurant with a menu ranging from tandoori chicken to dosas might create multiple brands with the same menu but give each a different name and lead photo, said Matt Newberg, the founder of Hngry, an industry publication that explores how technology is reshaping food.

“I might be more likely to click dosa if the dosa concept is in the title,” he said.

Restaurants could experiment with what worked because there weren’t guidelines.

“The industry is changing faster than the platforms can keep up,” said Mr. Newberg.

Previously, delivery companies including Grubhub and DoorDash updated their guidelines to require that online brands have differentiated menus, while monitoring orders and cancellation rates from virtual restaurants. 

These ‘virtual restaurant’ menus most operate inside established restaurants, looking to boost sales by creating their own menus or licensing and selling one or two delivery-only brands. Some virtual restaurants operate in food trailers run by Reef Technology, ghost kitchens like Travis Kalanick’s CloudKitchens, or food halls like Kitchen United, Insider reported.

“Virtual brands don’t exist just because they want a virtual brand. You need a complete business case around it,” John Peyton, chief executive of IHOP parent Dine Brands, told the Journal.

With Post wires