China’s New Food Delivery Rules Target Ghost Kitchens

China’s food delivery industry — a market projected to exceed 1.4 trillion yuan (US$193 billion) — entered a new regulatory era on June 1 as sweeping provisions took effect targeting “ghost kitchens,” fraudulent merchant credentials, and inadequate platform oversight. The new rules, formally titled the Provisions on the Supervision and Administration of Food Safety Principal Responsibilities of Online Catering Service Operators, replace the 2017 framework and introduce what regulators describe as a “full-chain, transparent information disclosure system” designed to restore consumer confidence in the country’s booming delivery sector.

A Market Under Pressure

The regulatory overhaul arrives at a critical juncture. China’s food delivery market now accounts for approximately 24% of total catering industry revenue, with year-on-year growth exceeding 10%, according to the China Catering Industry Annual Report cited by Xinhua News. But this explosive growth has been shadowed by persistent food safety scandals, most notably the proliferation of “ghost kitchens” — unlicensed food operations that use fake addresses, fabricated photos, and fraudulent credentials to appear as legitimate merchants on platforms like Meituan and Ele.me.

The problem came to a head on April 17, when the State Administration for Market Regulation (SAMR) imposed combined fines and confiscations totaling 3.597 billion yuan (US$497 million) against multiple delivery platforms in what was the largest enforcement action in China’s online food delivery regulatory history. Both corporate legal representatives and food safety directors were subject to “dual punishment” — a penalty framework that penalizes both the company and its individual executives.

What the New Rules Require

The new regulation, detailed in reports from the Economic Information Daily, introduces several transformative requirements:

• Substantive merchant review: Platforms must conduct on-site inspections of merchant premises, not just formal document checks. Online store names must match physical storefront signage.
• Mandatory information display: Business licenses, food operation permits, and health certificates must be prominently displayed on platform pages.
• Six-month verification cycles: Platforms must cross-check merchant information against provincial market regulation databases at least every six months.
• Clear labeling: “No dine-in” merchants must be clearly labeled, and “Internet + Bright Kitchen Clean Stove” real-time kitchen monitoring is encouraged.
• Food safety seals: Tamper-evident seals on delivery packaging are now mandated.

Violations carry fines of up to 200,000 yuan. For platform executives who intentionally violate the law with severe consequences, fines can reach one to ten times their annual income from the previous year.

The Crackdown on Ghost Kitchens

SAMR Food and Catering Department Director Yu Lu made the agency’s position clear: “The existence of ‘ghost kitchens’ has seriously disrupted the normal market order of the food delivery industry and damaged the public’s confidence in catering food safety,” he told Legal Daily in March. “To rectify ‘ghost kitchens,’ we must trace back to the source and build a systematic governance system.”

SAMR Food Safety Director Sun Huichuan delivered an equally blunt warning to platforms: “They cannot collect commissions without taking responsibility; they cannot manage traffic without caring about quality. Platforms must truly shoulder the principal responsibility of being the ‘goalkeeper’ of food delivery food safety,” he said, as reported by Xinhua.

AI and Technology at the Forefront

A distinctive feature of the new regulatory push is its embrace of artificial intelligence as an enforcement tool. Meituan’s “Bright Kitchen Clean Stove” AI inspection system automatically detects violations like dirty walls and floors. Taobao Flash Purchase has built a “3+1+AI” system that detects Photoshop-manipulated credentials and AI-generated fake storefront photos, requiring unedited continuous video verification for new merchants. Zhejiang Province has deployed the “Mingchu AI” vertical model with four core algorithms for video diagnosis, environmental assessment, rodent detection, and operational compliance.

Delivery riders are also being enlisted as food safety monitors. As reported by the 21st Century Business Herald, Meituan rider Zhou Yunchuan noted: “Riders visit dozens of stores every day to pick up orders. We know best which stores have substandard kitchen hygiene or improper operations when we arrive to pick up food.” Rider “snap and report” programs now operate in 48 cities, with rewards for quality tips.

Industry Response and Implications

Major platforms have been preparing for months. Taobao Flash Purchase has expanded nationwide merchant verification and connected with all 31 provincial market regulation databases. Meituan has launched a new labeling system and established data-sharing mechanisms with over 70 regulatory authorities nationwide. Beijing and Shanghai market regulators have jointly conducted administrative guidance sessions with the three major delivery platforms, signing framework agreements for collaborative governance.

Industry analyst Zhu Danpeng, Vice President of the Guangdong Food Safety Assurance Promotion Association, told Xinhua that the new regulations mark a pivotal moment: “The implementation of these new regulations marks that China’s food delivery market has officially entered a new stage of standardized, professional, and standardized development.”

What to Watch

The regulation’s effectiveness will depend on enforcement consistency across China’s provinces and cities. Questions remain about whether increased compliance costs will be passed to consumers or merchants, and whether smaller operators pushed out of the formal market may migrate to unregulated channels. Academic analysis from the China Food Safety Network characterizes this as a shift from “heavy punishment deterrence” to a “long-term governance mechanism” combining government oversight with platform social responsibility — a model that could serve as a global precedent for regulating the platform economy.