THERE'S no such thing as a free lunch, but there is free bread pudding—and that's a mighty fine thing in my book. At Bill's Cafe, which now operates in two San Jose locations, a moist, whisky-sauced, nut-and-raisin-inflected bread pudding arrives gratis at the end of lunch. It's a sliver of a portion to be sure, but it's divine, and it's ... well, free.

Why do they do it? "It's a way for us to show appreciation for our customers," says co-owner Peter Zafiris. Indeed.

The original Bill's Cafe, located in Willow Glen, has been serving breakfast and lunch to hungry diners since 1977. Zafiris and his two brothers took over the reins there in 2006, and business was so good they decided two Bill's would be better than one. The new Rose Garden outpost, which just celebrated its 1-month anniversary, occupies the historically busy intersection of Naglee and Bascom, home first to the Corner House and, more recently, to a quickly forgotten Chinese breakfast joint called the Panorama.

With a nearby medical center and convalescent home, the new Bill's caters to fewer of the techies and lawyers who populate its original spot and more to the over-60 crowd, but that suits Zafiris just fine.

His love for his customers shows, both through the efficient service of his well-trained, coffee-pouring staff and the warmth that pervades the simply decorated space. Everybody looks happy as they stuff their faces with three-quarter-pound Rose Garden burgers and Belgian waffles the size of Montana.

Serving only breakfast and lunch, Bill's knows its way around typical diner standbys—we're talking eggs (scrambles and hollandaise-laced "benedictions"), pancakes and expertly grilled sandwiches and burgers. Everything I tried was spot-on. The spinach-flecked Petaluma scramble ($8.95) with chicken-apple sausage, mushrooms, Swiss and salsa was cooked just as it should be, the eggs creamy but not runny, with generous amounts of meat and vegetables. (Egg dishes come with a side of potatoes and toast, and substituting fresh fruit is no problem.) The flying-saucer-size buttermilk pancakes ($4.95–$5.75) and strawberry- and whipped-cream-topped waffles ($7.75) are the Platonic ideals of classic breakfast fare. Best of all, the coffee flows—servers dance around, deftly refilling your cup before it's half empty. I mean, really, this place is breakfast nirvana and it's totally devoid of attitude.

Peter Zafiris, his older brother George and younger brother Jimmy arrived in Northern California in 1992. They're originally from Sparta, Greece, and several dishes on the menu reflect these roots. A mild and viscous chicken, rice and lemon soup (avgolemono), thickened with eggs, is served daily, along with a second homemade soup choice that rotates in and out. (The tortilla soup was also good, and Friday is clam chowder day.) Soup and either potatoes or fruit come standard with all the sandwiches.

Speaking of sandwiches, a classic Greek gyro ($7.95) arrives in a foil-wrapped puff of the softest pita bread I've ever tasted. Gyros can often be a disastrous mess, but this one was pretty neat, even with the thick blanket of yogurt saucing the lamb. Grilled sandwiches, burgers and fresh salads round out the lunch menu. The Conquest ($8.50), a toasty turkey sandwich on sourdough, happily oozed melted cheddar and thousand island dressing. The turkey was exceptionally moist—hallelujah, since there's nothing more depressing than a dry gobbler.

There's not much of a downside to Bill's except that its parking lot is too small and weekend breakfast-goers have already discovered it, leading to peak wait times that hover around the 30-minute mark. Happily, Zanotto's Market has offered up its large parking lot across the street to the diner's customers (on weekends only) and an outdoor coffee station keeps everyone perky. On one Sunday visit, I saw Zafiris run across the street to the market, brown paper bag in hand. "I bring them breakfast sometimes," he says, "because they've been such good neighbors." He also buys his produce there when his stock runs low. (In fact, wandering around Zanotto's for 30 minutes isn't such a chore. You can get your weekly shopping done before breakfast.)

With business booming and the neighborhood embracing its newest eatery, why must Bill's close at 3pm? "So I can go home and spend time with my family," Zafiris answers matter-of-factly. He's got a 21-month-old daughter, so as much as I'd like an occasional breakfast burrito for dinner, it's hard to argue with his logic.