This issue is solved by adding the environment variable "DNSMASQ_USER" with the value of "root".
Here is my working docker-compose.yml file as an example:
version: "3"
services:
pihole:
container_name: pihole
image: pihole/pihole:latest
hostname: pihole1
cap_add:
- NET_ADMIN
ports:
- "53:53/tcp"
- "53:53/udp"
- "67:67/udp"
- "8080:80/tcp"
environment:
- TZ=${TZ}
- WEBPASSWORD=${WEBPASSWORD}
- DNSMASQ_USER=root
volumes:
- ${DIRECTORY_PIHOLE}:/etc/pihole/
- ${DIRECTORY_DNSMASQ}:/etc/dnsmasq.d/
restart: unless-stopped
I will follow up this post with details of what I did to set up the docker container.