The Grubstake’s official History page perpetuated the myth that the diner was a genuine Key System interurban rail car. In reality, it was a “lunch wagon” manufactured for use as a small diner. [Note: There were several diners of this type in San Francisco, such as "Harry's Lunch Wagon" at 1921 Post Street, where Humphrey Bogart scenes from "Dark Passage" (1947) were filmed.]  Directories list "Dan's Diner" at 1525 Pine Street as far back as 1919. "Dan's" stayed in business for over 45 years. There was a sign there for many years that read "Dine Here and Dine in the Alley," because there was a strip of land right next to the rail car, big enough for a car to drive through. The interior had built-in counters on the sides of the car, with stools under them. Through the ensuing years, this charming dining car did business as "The Red Caboose" and "Orient Express."  The name Grubstake II came in 1967 when partners David Sisler and Arthur Reeb left "Grubstake I," a twelve-stool burger place on Mason Street near Ellis (now the site of Park 55 San Francisco, a Hilton hotel), to christen "Grubstake II" at 1525 Pine Street. Until 1975, the stove was right inside the door, in front of the four Pine Street windows. In 1975 the owners built a kitchen toward the back and took over the alley by constructing a dining room, adjacent to the "rail car." They also hired a young man named Jason Philips (now an established artist in Seattle) to design the charming murals on the east wall.

In 1989 the Sisler and Reeb retired and sold the business to Fernando Santos and his cousin, natives of Portugal. They steered the Grubstake II toward the 21st Century with a beautiful modern kitchen, while retaining the charm and excellent food that brings customers back, year after year, from all over the world. The famous traditional burgers, sandwiches and eggs menu were augmented with delicious fresh Portuguese "specials" which change daily. A few years ago Fernando’s cousin sold his interest, and Fernando’s wife, Linda became the partner.

 The Grubstake was featured in the episode "One of a Kind" (S2x03), on Food Network's Diners, Drive-Ins and Dives. Host Guy Fieri interviewed the owner and made Portuguese dishes, from kale and linguisa soup made with kale from the owner's garden to Portuguese style pork chops.

In July 2015 the couple struck a deal with Nick Pigott, who owns Mayes Oyster House (1233 Polk).