What is the origin of the stereotypical diner design? To be specific, the fake-chrome, neon lights, and gaudy jukebox look. It is obviously a deliberate style, and must be a relatively modern one because surviving older diners seem to look like the surrounding buildings.
Yes! Yay! One of my favorite aesthetics and history stories alike! Here's an earlier answer of mine on the matter:
Today, the standard chrome, white, and red diner powers both its business MO and its appeal to customers through the engine of nostalgia. During the 1940s-50s heyday of the "classic" diner, however, those components harnessed practicality and frugality for busiiness owners, and the appeal of the modern for customers.
Richard Gutman charts the history of the American diner back to the late 19th century--and at first glance, this might not make much sense. He points to the practice of setting up mobile wagons to serve quick food to patrons as an alternative to the lengthy (and often expensive and nicer) service at sit-down restaurants. These were useful for workers at lunchtime and when getting off work. In other words: Gutman would seem to be telling the history of the food truck, not the diner!
But as early as 1880, the progression towards the mid-20th century diner begins. In Massachusetts, Samuel Jones started building really large wagons that had room inside for patrons to sit and eat their still quick, still cheap food. Other nearby businessmen copied his idea, resulting in the beginnings of a "template" for the workers' mobile restaurant alternative to formal dining.
But as the wagons got larger and the crowds more enthusiastic, New England cities started banning them as public safety hazards. No worry--now it was New York and New Jersey that led the way in businessmen metaphorically anchoring their food wagons to the ground. That is, they had to build permanent fixtures, to comply with safety ordinances--but the food wagon was an important institution as an alternative to restaurants for quick prepared food. The wagon became the template for the permanent stands. This idea of a template was key--it made diners quick to design, build, and operate, because everything was known.
The chrome/white/black diner that we know and love today represented the evolution of the business practices of the 1910s-20s food "wagons" in the late 30s-40s. One school of design taste shifted through Art Deco into what is known formally as Streamline Moderne, and more romantically as raygun gothic (see: /r/RetroFuturism). Chrome, rounded edges, a general travel/transportation ethos: these design elements reflected both consumer mentality and the increasingly cheap availability and utility of those materials for buildings.
And so while the permanent diners of the 1910s were the wagons that people recognized moving around, the diners of the 1940s resembled the new look of train cars. The stainless steel exteriors were easy to prefabricate and erect quickly and cheaply as diners proliferated through the Northeast into the Midwest. The stark white and black interiors, with smooth ceramic and shiny laminated surfaces, reflected the mentality behind the space agey raygun gothic as well as the reason to go to a diner in the first place: the efficiency of quick dining, the cleanliness of an ideal world.
Through the 1950s, as prefabrication of diner parts became more common and more lucrative (diners were increasing in size as well as number), they actually became even more like our modern reproductions. But while diners had the advantage of physical as well as business-plan prefabrication, they began to lose ground to even quicker, even cheaper options--that is, fast food franchises. However, we have to push into the 1960s to pick up the last piece of your diner experience, OP: breakfast. In response to competition from fast food and declining market share, more and more diners shifted into the easier (and cheaper to supply) breakfast market. To be sure, the largest diners in big cities had added breakfast or a breakfast-time service earlier (24 hour diners mostly date from the 1950s), but this was the spread of breakfast service to smaller towns, to "rest stop" diners.
So if diners flourish in the 1940s-50s and are fading by the mid-60s, surely it will take at least a few decades for nostalgia to bui--oh, who are we kidding, this is America. Chester Liebs and other scholars date the revival of the diner to the mid-1970s, basically on the heels of its supposed decline. Richard Gutman's American Diner Then and Now, originally published in 1979, gets a lot of credit for romanticizing the idea of the diner as a key component of Americana to the popular imagination. But he was of course getting the idea from sentiment that was already building. (The great/terrible 50s nostalgia trip Grease was released in 1978, and Billy Joel's Brenda and Eddie were described as a hit at the Parkway diner in a 1977 song).
The revival of the diner fell into two iconographic camps, more or less. One was what you might call the homier aspect--think Denny's or Shoney's or even Waffle House, with darker wood, yellower lighting, and those not-really-chandelier light covers that I don't know what they're called (but you can probably picture them as I type this). This drew back more towards the 1920s through the 1940s diner; these more 19th century elements had faded out with the rush to prefab in the 50s. The other is embodied above all in Johnny Rocket's (established 1986), whose original restaurant is according to legend based on an actual 1940s diner. The chrome stools and white Formica are the classic construction materials, but most Johnny Rockets' also display the railroad car=>wagon origins of the diner in their long, narrow construction. (Contrast a chain like Steak n' Shake, whose partial diner DNA is evident in the chrome-white/black-red look including a counter with stool, but whose layout more resembles a sit-down restaurant).
And there is perhaps no clearer sign of the power of diner nostalgia than Johnny Rocket's (and similar venues') entrenchment as a theme park restaurant. It's not just a place to buy overpriced shakes and fries in between roller coasters--the chrome, white, and shiny color look and the feelings it evokes is a sanitized amusement recreation in and of itself.