The Frosty Palace is a malt shop and a regular hangout for teenagers who attend Rydell High.
The Frosty Palace is a round building, with a wider roof than body (possibly an awning) with icicles hanging from it, and icicles painted on the body. On top of the building is it's name, Frosty Palace, with a snowman (a possible reference to Frosty the Snowman) holding an ice cream sundae, three ice cream cones and two banana splits - or dogsled delights (as Sonny called them) - behind the snowman.
The Frosty Palace appears to be a drive-in restaurant, as several carhops were seen bringing food out to cars. The parking lot, however, only has enough space for about 10 cars, but most customers walk. Those who drive there mostly place their order, and leave once they've received their food, and walk up customers just place their order, receive their food, and leave. But the inside, is almost never empty. There's a TV set and a jukebox inside the Frosty Palace, so don't expect to be sitting around the whole time.
Role in film
The Frosty Palace first appeared in the cartoon introduction, with the credit, "Dances and Musical Sequences Staged and Choreographed by Patricia Birch." The T-Birds were driving slowly passed it, but the Pink Ladies passed them by, and they sped off passed the Downtown Tavern.
After Greased Lightnin', the T-Birds met at the Frosty Palace to discuss plans for a drag race with the Scorpions, but Danny becomes distracted when he saw Sandy sharing a sundae with Tom Chisum, one of Rydell High's star athletes. When she got up to change the song on the jukebox, Danny left the meeting to apologize to Sandy for his behavior at the bonfire. Danny tried insulting Tom, but Sandy retaliated by reminding him he's never done anything athletic before.
After joining the Rydell track team, and winning Sandy back, Danny took her to the Frosty Palace for a date, but their friends crashed it. Kenickie and Rizzo split up and Frenchy, now working at the Frosty Palace and has pink hair, revealed to Vi, who probably owns the Frosty Palace, that she dropped out of Beauty School and doesn't know what to do with her life, now. She stayed behind after the restaurant closed and was visited by a Guardian Angel who advised her to go back to Rydell (Beauty School Dropout).
The waitresses of the Frosty Palace watch the dance off on the restaurant's TV, and they even point out the T-Birds and Pink Ladies; however, they didn't recognize Doody, Sonny, and Putzie when they mooned in the camera because their jackets were over their heads and faces, and Vi says, "I wonder who that is on the right (Putzie).
Behind the Scenes
Notice the blurred out menu panels and several props. When the movie was first shot, Coke was one of the intended sponsors. At some point, during the making or release, Pepsi became the sponsor. The blurred out boxes and menu panels all contain the Coke Logo. Right before Beauty School Dropout begins, Vi goes to turn off the light with her elbow. She misses the switch by nearly 6 inches, yet the lights somehow go out... It must have been the Guardian Angel!