Uber Eats cleans virtual house
The food delivery app is cracking down on a rash of spammy virtual brands
Uber Eats is doing some spring cleaning. Per the Wall Street Journal, Uber’s food delivery business is delisting thousands of online-only brands from its platform, after the app got too cluttered with virtual storefronts.
If you’ve ever ordered from Uber Eats, DoorDash, Deliveroo, or any other food delivery app, you might know that while some of the restaurants you see have dining rooms you can also eat at in real life, others exist purely to serve their virtual customers. These virtual restaurants or “ghost kitchens” were all the rage a few years ago. UK-based Deliveroo tested custom-built kitchens it called “editions,” Uber teamed up with London startup Karma Kitchen to launch a “restaurant accelerator,” and disgraced Uber co-founder Travis Kalanick raised $400 million from Saudi Arabia’s sovereign wealth fund to build his furtive ghost kitchens empire.
The business case for ghost kitchens was two-fold. First, lots of restaurants getting into delivery were limited by the practical reality of how far they could go. Opening a new restaurant to expand your delivery footprint is expensive, time-consuming, and probably not worth it, but opening a small food prep space—basically, a commissary—is a lot more manageable. Ghost kitchens helped restaurants expand their delivery radius from, say, the Upper West Side to Soho without having to open a whole new location. Second, ghost kitchens let delivery apps fill gaps in their virtual menus. When Uber partnered with Karma Kitchen in 2019, for instance, it planned to identify what it called “selection gaps” in the market that could be solved with a ghost kitchen. For instance, if Uber noticed lots of customers searching for pizza in an area without many pizza delivery options, it might invite a pizza concept to its accelerator.
The perhaps unintended effect of ghost kitchens was to unbundle the menu. As more diner dollars moved online, restaurants realized they could increase their odds of landing an order by creating more virtual storefronts for customers to stumble into. In late 2020, Eater reported that some restaurants were launching new online brands devoted to a single food concept. Sandwich chain Melt Shop created “Melt’s Wing Shop” and “Melt’s Cheesesteaks” rather than add those items to its existing online menu. Bay Area fried chicken restaurant Starbird Chicken rolled out Starbird Wings, Starbird Salads, Starbird Bowls, and Garden Bird. “By having multiple brands, we own a greater portion of digital real estate,” Starbird Chicken founder Aaron Noveshen told Eater at the time. “We can make that site highlight a full menu category.” Just as cable TV unbundled into individual channels and streaming services, restaurants in the digital age went from comprehensive menus to à la carte stores.
Things might have been ok had they stopped here, but what started as unbundling soon morphed into a very spammy online ordering space. The Journal reports that on Uber Eats, the number of virtual brands quadrupled to more than 40,000 this year from around 10,000 in 2021. That wild explosion included “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 online-only options from a San Francisco-based Pakistani restaurant that, at one point, replicated its menu 20 times.” Uber is removing all of those as part of a purge of 5,000 online storefronts, as well as rolling out new guidelines that require more than half of a virtual brand’s menu to be different from any other brands run by the same kitchen.
While it’s unclear what prompted the crackdown, you have to wonder if the virtual clutter was impeding Uber Eats’ sales. Decision paralysis is a well-known phenomenon in which having more options can make it harder and more anxiety-inducing to reach any decision at all. It’s also incredibly common in a world of seemingly endless online offerings. Who among us hasn’t spent so long scrolling Netflix that they ran out of time to watch anything at all? Interacting with the digital world can feel like this a lot: trying to find the right thing on Amazon, where there are endless permutations of every item; trying to find something to watch on a streaming service or something to order on a food delivery platform. Sometimes more choice is good, but sometimes you just want one menu you trust with a dozen options to choose from.
Whether Uber Eats customers were suffering from decision paralysis made worse by spammy virtual restaurants is a question only Uber’s data scientists can answer (if you are one, do get in touch, I’d love to chat), but the Journal hints this was part of the problem, citing Sam Brown, a 22-year-old student in New York City with an impressively generic name. “The other day I typed breakfast and literally had like 20 restaurants with the same menu blow up in my face,” Brown told the Journal of a recent food delivery app experience. The punchline: he went to Starbucks instead.