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A police spokeswoman said they received a report about 2pm of "people doing drug deals" outside the North Dunedin fast food outlet.
The young man was pulled over by police in a waiting police car after he drove out of the car park into Great King St.
The man was taken into custody and a tow truck dealt with his car.
The 23-year-old was arrested about 2.20pm and would appear in court charged with "driving while licence suspended", the spokeswoman said.
There was no word on whether further charges were likely.
A KFC staff member confirmed police were called because of suspicious behaviour in the car park.