Last April, a significant piece of news emerged from China: seven of the country's largest delivery platforms were fined a staggering 3.6 billion yuan, or approximately 17 billion baht.
The platforms were penalized for allowing "Fake Restaurants" or "Ghost Kitchens" to operate on their apps.
This represents the highest fine ever recorded since the National Food Safety Law took effect in 2009—a law enacted following the infamous melamine-tainted milk powder scandal in China.
What exactly are these fake delivery restaurants, how dangerous are they, and why are they spreading across China?
Longtunman will explain.
In today’s world, where we use delivery services as a matter of course, we may be familiar with the term "Cloud Kitchen." These are kitchens designed exclusively for delivery with clear hygiene standards, despite having no physical storefront for dining in.
However, the "Ghost Kitchens" or fake restaurants currently plaguing China are an entirely different story.
These establishments often use fake addresses, such as old commercial buildings, cramped rental rooms, or even damp basements, serving only as staging points or heating stations for delivery food.
The beautiful storefront photos seen on the application are often generated by AI or stolen from the internet to deceive users.
As for food business licenses, these shops either rent them from others or use falsified information to bypass the verification systems of various delivery platforms.
Yet, the true horror of this situation lies not in the fake addresses, but in the cooking methods.
Many of these fake restaurants lack basic cooking equipment—sometimes not even a gas stove. They can operate because of "pre-packaged meals."
These shops only require a microwave or a pot of boiling water to heat up frozen food packets that can be stored for up to a year. They simply tear the bag, pour it over rice, place it in premium-looking packaging, and send it out.
This process allows fake restaurants to offer prices 30% to 50% lower than legitimate shops, making it impossible for physical restaurants that cook fresh meals to compete on price.
Another form of these Ghost Kitchens occurs when you order from "Restaurant A" on an app—a fake restaurant with a professional-looking profile.
Restaurant A doesn't actually cook. Instead, they pass the order into "secret chat groups" or intermediary platforms for other shops to subcontract, using a system where the lowest bidder gets the job.
For example, if you order a cake for 500 baht, Restaurant A posts the order in a group. If "Shop B" offers to make it for 200 baht while "Shop C" offers 300 baht, Shop B wins.
Shop B gets the order because they offered the lower price, earning 200 baht, while the remaining 300 baht goes to Restaurant A as pure profit.
The shops that take these subcontracted jobs are usually those that fail to meet hygiene standards. To turn a profit at such low rates, they use the cheapest ingredients possible, such as low-quality non-dairy creamer or decorative flowers that are not food-grade.
This was exactly how the secret was exposed.
A customer filed a complaint with government agencies stating that the flowers decorating their cake were not food-grade and were unsafe for consumption, prompting an official investigation.
Upon inspection, authorities found that the cake shop had not only violated food standards, but all 378 of its "branches" nationwide had no physical presence, and their business licenses were forged.
This led to a massive crackdown, revealing that over 67,000 restaurants across various major Chinese apps were entirely fake, resulting in the historic fines against the delivery platforms.
If you wonder why platforms let this happen, the answer is simple: more shops and more orders mean higher commission revenue for the platform.
Therefore, if the vetting process is too strict, the company risks losing revenue and market share.
From the milk powder contamination in 2008 to the fake restaurants of 2026, it seems that profiting by compromising quality remains a trap that many Chinese businesses repeatedly fall into—even as many Chinese firms have now become global leaders.