Uber Eats is making changes to how it handles virtual brands in an effort to improve the quality of delivery-only restaurants on its marketplace.
The plan involves ridding its app of thousands of listings that are simply replica menus under different names while also working to connect small restaurants with legitimate virtual brands.
“It’s all about quality,” said John Mullenholz, Uber’s head of virtual restaurants and dark kitchens for the U.S. and Canada. “Everything that we’re announcing this week comes back to quality.”
Virtual brands are restaurants that exist only online for delivery or pickup, with the food itself being prepared by an existing restaurant. The idea took off early in the pandemic as delivery boomed and operators looked for new ways to generate revenue. And the number of virtual brands continues to grow: Uber Eats said there are now more than 40,000 virtual storefronts on its app.
Not all of those storefronts, however, are completely original concepts. Some restaurants discovered that they could use the same menu as the basis for multiple brands, allowing them to occupy more digital real estate for free.
But the strategy has flooded the app with restaurants that are virtually identical, hurting the customer experience and crowding out actual restaurants.
Uber Eats is now using an algorithm to identify these redundant concepts and working with the parent restaurants to take them down. It has also changed its virtual brand guidelines to prevent the practice in the future. For instance, virtual brands on the app must have a menu that is at least 60% different from both the parent restaurant and from any other virtual brands being offered at that location. They also have to include pictures of at least five menu items and include descriptions for every item.
“That’s an effort to just make sure that restaurants aren’t launching the exact same concept or a similar concept under a different name,” Mullenholz said.
Uber Eats plans to remove 5,000 of these listings, or about 13% of virtual brands in North America, according to a report by the Wall Street Journal. They include a Colorado sports bar that has 12 virtual brands selling the same breakfast burritos and a San Francisco Pakistani restaurant that cloned its menu 20 times, the Journal reported.
At the same time, Uber Eats is doing more to help restaurants get set up with legitimate delivery-only concepts. Today it launched the Certified Virtual Restaurant Program, which will offer restaurants a library of established brands and make it easier to get started with them.
Uber’s initial partners in the program are virtual brand providers Nextbite, Virtual Dining Concepts and Acelerate. Options will include Nextbite’s breakfast-focused Huevorito, Acelerate’s Scratch Chicken tender concept, and Virtual Dining Concepts’ popular MrBeast Burger. The program will likely expand to include other companies and brands in the future, Mullenholz said.
Restaurants that enroll this way will have access to the companies’ operations teams, who will lend their expertise in setting up and running the brands.
“We are trying to help merchants who want a plug-and-play solution for launching a virtual restaurant,” Mullenholz said. He noted that while some restaurants are fully capable of doing this on their own, others need help. “We get inquiries every single day” about operating virtual brands, he said.
The program does not prohibit restaurants from using brands from other providers or from creating their own, as long as they follow Uber Eats’ guidelines. “We want to see a lot of variety and we want to see a lot of high-quality concepts,” Mullenholz said.
Uber Eats is eager to serve as a facilitator for delivery-only businesses, which, after all, help generate revenue for the company. But it has no plans to develop its own virtual brands, Mullenholz said. He is quite bullish on the future of such concepts, even beyond the pandemic.
“I would guess that a number of the large national restaurant brands that are built over the next five to 10 years, a meaningful portion of those are going to be built digitally or delivery-only or delivery-first,” he said. “We think this is a high growth area for years to come if not decades.”
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