Food delivery start-up faces fines, investigation following expose

Regulators have urged online retail services to exercise due diligence in reviewing vendor eligibility and operating standards.

Online sales accounted for more than 12 percent of total retail sales in China last year and are expected to grab an even bigger slice as e-commerce grows.

Ele.me counts major Chinese Internet firms among its backers. In December, Chinese e-commerce giant Alibaba invested 1.25 billion U.S. dollars into ele.me for a 27.7-percent stake, making it the start-up's biggest shareholder.

In addition to exposing sloppy kitchens, CCTV also revealed that ele.me's market specialist in north China's Hebei Province knowingly assisted an undercover reporter, posing as an unlicensed food vendor, in setting up shop on the platform.

Following the expose, local watchdogs raided some of the unlicensed restaurants operating on ele.me, according to local media reports.

Ele.me also said on Tuesday night that it has removed all unlicensed food businesses involved in the expose and will review the qualifications of all vendors on its platform.

Nearly 500,000 restaurants and vendors have signed up on ele.me's online platform to offer food delivery to 40 million users in more than 300 Chinese cities.

A survey conducted by the Shanghai Consumer Council late last year found that substandard service is a shared problem among leading online food delivery services.