Doughnut seekers who approached the establishment at 3916 El Camino Real Wednesday were stunned and saddened by the news, which was posted on signs that indicated the last cruller and jelly doughnut would be served at 10 p.m. Friday.
Owner Soknea Hort said the store lost its contract but added that she is looking for a new location in Palo Alto to open soon.
"Thank you for your support of us at this location," she wrote in an email.
The shop has been a lifeline of late-night sustenance for Stanford and high school students studying for exams, customers Tim Whiting and Julie Fife said.
"Everybody from Stanford has a story about something they did in this place," Whiting said. "A doughnut was a doughnut to me before. This is the first place where I thought, 'Oh, I'll have to get a Happy Donut.'"
"I'm glad we're moving," Fife added, saying it would be sad to live in Palo Alto and not see Happy Donuts here anymore.
The restaurant — which is one of Palo Alto's last to be open 24 hours a day, seven days a week — the other is Subway on University Avenue — has been a hangout for insomniacs and other nighttime denizens. The store is packed on weekend nights.
One businessman, Bill, who asked that his last name not be used, called the eatery "a landmark."
"They have the best doughnuts in town — they really do," he said.
Barron Park resident Jean Doten has been a customer for 15 years. The wide tables were perfect for grading papers when Doten was a teacher, she said.
She would hang out at Happy Donuts with her four daughters when they were in high school. The staff got to know the family and would sometimes add a few extra doughnut holes to their order.
"One Easter Sunday I stopped by at 1:30 a.m. on my way home from the Vigil Mass and had a wonderful conversation about the Easter customs of the Philippines with the young man who has been doing the late shift for years," she said.
The congenial atmosphere has become an ideal spot for discussing and resolving stressful topics with her ex-husband, she said.
"To this day if he has to hang around town he settles there with his laptop and invites me over for a chat," she said.
Happy Donuts has had several owners over the years. There are a number of stores from San Francisco to San Jose bearing the name but with different owners, an employee at a San Jose location said.
What will replace Happy Donuts at its current location remains unknown. Some workers indicated that a doughnut shop could reopen at the site under a different owner in a few days. Employees on the night shift said the store is closing forever.
Hort did not elaborate on plans for the store. Calls to the property owner were not returned, though a relative of the owner said the family does not intend to sell the property.