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This is due to the way tankless water heaters work
They take quite a bit of time to fire up. About 8 seconds and then they slow down the flow to a rate that it can heat to the desired set temperature.
Depending on you house pressure and how it is plumbed hot water will flow through the system at a rate as low as a foot a second.
There are some things that can be done to help with the issue. What is the set temperature?
Lower it down to 120. 120is more than hot enough to sterilize your dishes and we humans only shower in 104 so lowering the set temp will allow it to go through the system faster. Next would be to install a recirc pump and a thermal bypass valve.
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