Uber Eats is Taking Down Virtual Brands

Apr 06, 2023

Today, when a new virtual experience is announced, one might conjure up ideas of an alternate reality as seen in VR gaming or through the lens of a robot. But what about food from “virtual” or “ghost kitchens?” The food is real, but these eateries aren’t “traditional” restaurants.

Ghost kitchens have seen an incredible increase since the COVID-19 pandemic. When the pandemic was at its height, thousands of restaurants were forced to shut down their standard operating procedures. Many tried to adapt to a take-out-only model, and that is where ghost kitchens thrive.

What are Ghost Kitchens or Virtual Brands?

Ghost kitchens aren’t an illusion. They provide a food service for customers like traditional restaurants; however, the kitchen has no physical storefront. Ghost kitchens allow patrons to still make purchases for take-out or delivery.

On the other hand, virtual brands (sometimes referred to as “virtual kitchens”) are a bit different in that they’re an extension of a traditional, physical eatery that also offers take-out options.

virtual brands

Benefits of Ghost Kitchens and Virtual Brands

These ghost kitchens and other virtual brands have been successful over the last three to five years. And that success is expected to continue, even increase more. But what are the benefits of these ghostly food services?

Ghost kitchens offer many benefits to restaurants or chefs looking to strike it out independently. They require a lot less capital or start-up hurdles. There is no real estate to deal with, which significantly cuts operating or overhead costs.

But the most significant advantage is the size of the potential customer base. The vast majority of teenagers and adults have smartphones. That is the identical customer base ghost kitchens and virtual brands want to attract. Ghost kitchens can advertise on Uber Eats and GrubHub and see plenty of foot traffic – no pun intended.

However, delivery or take-out options can be limiting when developing a menu. Take-out food has to be travel-ready, and the food shouldn’t suffer during transit. Ghost kitchens that use third-party delivery – like Uber Eats and GrubHub – can also expect to lose a substantial profit. Those services can take 25-30% of a ghost kitchen’s sales.

Why is Uber Eats Removing Ghost Kitchens and Virtual Brands?

The biggest hurdle to starting and maintaining a ghost kitchen is those third-party delivery services. Uber Eats–one of the most popular food delivery services–is stopping ghost kitchens themselves.

Specifically, Uber Eats is removing duplicate menu offerings where virtual kitchens are mostly affected. The app argues that multiple listings of similar menus make the app cluttered rather than more manageable, easier to navigate, and ultimately, can drive customers to lower-quality options.

For the ghost and virtual kitchens that make it through the “decluttering,” new restrictions must be followed. Uber Eats will require that all ghost and virtual kitchens offer a menu that is at least 60% different from any other kitchen operating at the same brick-and-mortar location.

While customers will likely be happy with few options and a higher quality standard, restaurants could see some issues. They must craft a substantially different menu if a physical location is shared among several ghost or virtual kitchens.

Still, ghost and virtual kitchens are trending and are expected to continue. People still want the ease of restaurant eating without having to go physically to the restaurant. The Uber Eats crackdown will create better food and overall experience for everyone.