Diners developed from mobile catering wagons. Like the catering wagon, a diner allowed one to set up a food service business quickly using preassembled equipment. The first manufactured dining wagons with seating appeared in the late 19th century, serving busy downtown locations without the need to buy expensive real estate. Until the Great Depression, most diner manufacturers and their customers were located in the Northeast. With the rise of the automobile, diner manufacturers produced more fixed-foundation buildings.
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Diner manufacturing suffered with other industries in the Depression. After World War II, as the economy returned to civilian production and the suburbs boomed, diners were an attractive self-employment opportunity. During this period diners spread beyond their original market to the Midwest. --from wikipedia.org