Horror-comedy is something very difficult to do. So many films tried this blend of genres in the 1980s and failed miserably: Ghoulies 3, TerrorVision, pretty much anything Troma ever did. And only a few truly brilliant filmmakers were able to really succeed at this: Frank Henenlotter, Peter Jackson, Dan O'Bannon. This film is rare in that it falls generally between these two extremes. It's often very funny, and occasionally creative, but its obvious self-awareness can sometimes be trying.
Two brothers operate a vegetarian restaurant and secretly serve human flesh to their customers. They have an uncle (or what remains of him) who helps them to prepare for the feast of Sheetar by compiling a perfect woman out of assorted body parts. The bones of the plot are borrowed lovingly from H.G. Lewis's Blood Feast, but the majority of the film is pretty unique.
Unfortunately, because of their similarities, Blood Diner will always be compared to Blood Feast, and Blood Diner is just not that caliber of a film. Blood Feast brought on the sickening and sometimes too-real gore; Blood Diner's gore is cartoonish and cheap-looking. Blood Feast was technically flawed, but had enthusiastic performances and unmindfully creative camera work; Blood Diner is slick (as far as 80s horror-comedies go) and very self-conscious, but ultimately soulless in its execution.
The real key to a successful horror-comedy is that little dash of sincerity. You can have your jokes and fun, but a little sincere strangeness (or just plain scares) makes the film all the more real. If you like horror-comedy, and you've already seen Basket Case, Frankenhooker, Return of the Living Dead, Dead Alive, Re-Animator, and Brain Damage, you may want to give this a shot. It's sure as hell better than Troll 2.