Over the past few years, Portlanders have heard little about the plan to rebuild the old Dairy Queen on Southeast Division and 56th Ave. The Dairy Queen, which was demolished in 2019 after more than 50 years in business, was always supposed to be reborn in its spot across the street from Franklin High School. But the lot remains vacant. 

Earlier this month, people who live near the DQ site received an update—and a call to action—from the franchise owner. Letters distributed to neighbors explained the franchisee and property developers have been in a stalemate with the city of Portland over their right to include a drive-thru in the rebuilt Dairy Queen. 

The letters appealed to neighbors’ nostalgia for the ice cream chain, and urged them to contact the city with words of support for the drive-thru. 

The problem? New drive-thrus have been banned in Portland for several years now, as part of a broader effort to limit auto-oriented development and make it safer for people to bike and walk around the city. City policy allows some drive-thru facilities to be reestablished on properties where they used to exist. The old Division Dairy Queen, mostly known for its walk-up window, previously featured a small drive-thru. 

That policy seemed like a slam dunk for the business owner, but it came with a caveat. The city stipulates that drive-thrus cannot be reestablished if use of the former drive-thru facility is discontinued for three continuous years. It’s been more than six years since the Dairy Queen on Division shut down. 

Mohanbir Grewal, the Dairy Queen franchisee, isn’t walking away from his drive-thru plans without a fight. Grewal requested the city engage in a land use review process to determine if he retains the right to construct the drive-thru at the Dairy Queen property—a nonconforming use under Portland’s zoning code. That land use review is currently underway and seeking public comment. 

Grewal’s effort has found support from people who have fond memories of the old Dairy Queen, as well as those who see this situation as an example of the city of Portland’s broader mistreatment of business owners and developers. Complaints over the city’s permitting and development process are nothing new, but this particular situation has dragged on much longer than average, even considering Portland’s Covid-era permitting and construction delays. 

Others question the need for a drive-thru in such a walkable part of Portland, especially on Division, which is home to the city’s only frequent express bus service. Those who oppose the plan say if Portland allows this Dairy Queen to bypass the rules and proceed with a drive-thru that doesn’t conform to the city’s zoning code, it’ll pave the way for other businesses to do the same. 

Inside scoop on the DQ delays

Grewal, a Beaverton-based franchisee who owns several Dairy Queen stores in Oregon with his company Akum Investment Group, purchased the store on SE Division in 2017. Prior to that, the store was a fixture in the area—a 2010 Oregonian profile featured customers whose love for the Dairy Queen extended through multiple generations. But when Grewal bought the restaurant, he had lofty goals for the place. He set out to demolish the original building with a plan to replace it with something bigger and better. 

In an email to the Mercury, Grewal said the old Dairy Queen could’ve stayed as it was, but he wanted to “make it better for our customers with better design” to “uplift the neighborhood look.” The new Dairy Queen was designed to accommodate a larger drive-thru that would fit up to 10 cars, so those waiting in the line wouldn’t clog up traffic in the street. (The old drive-thru only fit two cars.) 

Grewal submitted an initial permit application for the new Dairy Queen building in 2018, and was approved for demolition in 2019. Since then, Grewal, his architects, and staff with franchisor Dairy Queen of the Pacific Northwest have gone back and forth with city planners about various aspects of the project. To date, Grewal has paid about $350,000 in fees to the city for permits, inspections, and system development charges (SDCs), including about $250,000 in SDCs to the Portland Bureau of Transportation (PBOT). PBOT charges significantly higher development fees to restaurants featuring a drive-thru window. 

Grewal says he has also taken on additional expenses, including for architectural, civil engineering, and consulting work, as well as for building materials. Grewal said he invested about $620,000 in the project as of October 2025, with about $200,000 more still obligated. 

In July 2022, a city planner informed the applicants that their right to include a drive-thru at the new Dairy Queen would be terminated if they didn’t secure a necessary permit by October of that year—three years after the city issued the demolition permit for the original property. They managed to get the needed permit, giving them another three years to build the new Dairy Queen and establish a drive-through at the site. 

Portland Permitting & Development (PP&D) Public Information Officer Ken Ray told the Mercury “it would have been an easy call to allow the drive-through lane at the former Dairy Queen site” if construction ever began on the plans the city approved in October 2022. But the Dairy Queen franchisee didn’t start construction, and ended up resubmitting another set of revised plans six months later, forcing the review process to start again. 

In September 2025, city planners notified Grewal that he had less than a month to build an operational drive-thru at the site, or the nonconforming use would expire. That would be an impossible task, considering construction hadn’t even begun on the restaurant. 

Grewal and his associates took issue with the city’s position. He claims the drive-thru was already approved as part of the project earlier this year, and says the city is now reneging without cause. Grewal also believes he shouldn’t be held responsible for construction delays, which he blames on the city’s slow permit approval process. 

“Ever since the demolition permit was issued in 2019, the City of Portland’s review and permitting process for the building permit application, and application to revise the plans, has been extremely slow, fragmented, and inconsistent,” Grewal wrote in a declaration appealing the city’s decision about the drive-thru. “The process of getting these permits has been plagued by substantial and continuing delays far beyond what several industry professionals have indicated I should expect for a project of this type.” 

Grewal is far from the first business owner to complain about working with the city of Portland on permitting and development. PP&D has been underfunded and short-staffed for years, leading to construction delays. Still, plenty of buildings and businesses have gone up since Grewal filed for the DQ permits more than six years ago. According to Portland’s permit review dashboard, it has taken the city an average of 95 days to approve business building permits over the last six years. 

City staff say it took much longer than average to approve Grewal’s initial Dairy Queen building permit application, submitted in 2018 and issued four years later, because the franchisee made so many changes to the building plans and took a long time to pay permit fees and schedule building inspections.  

“Permitting is a partnership between the City and the customer,” Ray told the Mercury. “Prompt issuance of permits and approvals of inspections relies on both parties to be timely and responsive.”

Trapped in the drive-thru 

The Division Dairy Queen drive-thru saga represents more than the sum of its parts. The letter Grewal distributed to nearby residents seemed designed to incite emotional responses from people who are nostalgic for the days when the Dairy Queen was still around. The letter claims that without the drive-thru, a Dairy Queen would “likely no longer be fit for this location,” stating that the drive-up window “helps elderly, people with disability and all of us in rain/snow when we do not need to park and come out of the vehicle.” 

The letter also attempts to convince neighbors that if the Dairy Queen isn’t built, they may see “another branded restaurant or high-rise building” take over the lot, although Portland’s zoning code generally limits building height to four stories in this part of the city. 

Judging from reactions to the situation on social media, Grewal’s approach seems to have been somewhat effective. 

Dan Krause, who identifies as an outer Mount Tabor resident on Nextdoor, used the app to encourage neighbors to support the project, writing that the old Dairy Queen “was a very important part of my life and my neighbors’ [lives].” Many commenters used the situation as a launching pad for their general grievances with the city of Portland. Milwaukie resident Brian Case warned others to “take your business somewhere else, don’t give a penny to these knuckleheads in Portland... it’s clear they just can’t help themselves from f’ing up everything they touch.”  

But others in the neighborhood have expressed their concerns about putting a drive-thru at that location. A heated exchange in the South Tabor neighborhood Facebook group featured many drive-thru naysayers, who pointed to their tendency to cause traffic congestion, especially on a street like SE Division. 

Drive-thrus have long been a target of ire for transportation reform advocates and environmentalists. In addition to the emissions created by idling cars in the drive-thru line, the feature may encourage people to drive more, and lead to unnecessary traffic conflicts. People walking and riding their bike may be especially impacted by long drive-thru lines, which can snake across sidewalks and bike lanes, blocking access for other road users. 

The Dairy Queen franchisee claims his drive-thru would fit enough cars to avoid traffic impacts. He and others involved in developing the store say it’s unrealistic to suggest a fast food restaurant like Dairy Queen could succeed without a drive-thru. With so much money invested in the project, the business owner wants to make sure the store is successful. He also has said that the corporate Dairy Queen franchisor would revoke his franchise license if a drive-thru is not included in the design. 

“Simply put, there will be no Dairy Queen at 5605 SE Division Street, Portland, Oregon, without the drive-through and my investment will be lost,” Grewal wrote in his declaration to the city. 

Opponents, however, say the situation is bigger than just this singular drive-thru. 

“The implications of such a determination [in favor of the development] would be vast and set a troubling precedent that would essentially prohibit zoning code from evolving, by allowing an absolute minimum effort of maintaining a no-longer-allowed use,” Rob Galanakis, who serves on the board of the Mount Tabor Neighborhood Association, wrote to the city planner in charge of the land use review. “Drive-throughs are currently prohibited for new development by the city, for good reason. An approval of this drive-through is not just an approval for this fast food seller. It would re-establish a land use the City of Portland does not want to allow, and establish it in perpetuity.”  

The city is accepting public comments about the Dairy Queen drive-thru until December 22.