We extend the dynamic van der Waals model introduced by A. Onuki [Phys. Rev. Lett., 2005, 94, 054501] to the description of cohesive granular flows under a plane shear to study their hydrodynamic instabilities. By numerically solving the dynamic van der Waals model, we observed various heterogeneous structures of density fields in steady states, where the viscous heating is balanced with the energy dissipation caused by inelastic collisions. Based on the linear stability analysis, we found that the spatial structures are determined by the mean volume fraction, the applied shear rate, and the inelasticity, where the instability is triggered if the system is thermodynamically unstable, i.e. the pressure, p, and the volume fraction, ϕ, satisfy ∂p/∂ϕ < 0.