Yan Zuqiang, head of the Shanghai Food and Drug Administration (FDA) said that the aim of the new regulation is to make consumers aware of what the establishment is permitted to sell.
The regulation shall take effect on Sept. 1.
An online platform was created by the Shanghai FDA and the Shanghai Communications Administration that is supposed to monitor establishments and if they are following safety regulations.
Food establishments are required to post photos of items being sold and uploaded to the platform.
"The online platforms used to require the vendors to submit their pictures via the internet in most cases, which saved time but left loopholes for fake photos," Yan said.
Once a violation is detected by the platform, it will send a report to the authorities.
There were 200 complaints filed in 2015 from consumers who were victimized by false advertising and poor food quality, according to the Shanghai Consumer Rights Protection Council.
There were 17,000 unlicensed food establishments registered in Ele.me that were found to be unlicensed since the platform was launched.
The government intends to continue monitoring food establishments as the demand increases. The law will take effect on a national scale in October, according to Fu Weiqiang, division head for laws and regulations at the Shanghai FDA.
The online food ordering business in China increased rapidly in the past years. It has now grown to an estimated worth of 45 billion yuan, or $6.7 billion, according to Analysis International.
Ele.me or translated to "are you hungry now?" is the biggest online food ordering service in China. The company is valued at $3 billion.
It is backed by JD.com and Tencent Holdings. The site has 40 million users and processes daily orders totaling to 60 million yuan or $9.4 million.
Most of the orders places are through smartphones. Ele.me is now one of the world's largest food ordering service, second to the U.S.'s Grubhub.
Alibaba Takeout is also riding on the online food business as its portal, Alibaba Takeout, follows suit.