Diamond Head Management yesterday told the eatery's 15 employees that it would be shutting down Dec. 31, said Buggy Cummings, general manager.
Diamond Head Management is owned by entertainer Don Ho's Ho Enterprises, which rescued the restaurant from shutdown three years ago after it ran into financial difficulties under previous ownership.
"It was tough to do business there," Ho said this morning through a spokeswoman. "Business got too tough."
The cafe, located on Kamehameha Highway on Bishop Estate land, is a well known eatery and watering hole for local motorists and tourists.
Since taking over the restaurant, Diamond Head Management converted the restaurant's largely American menu to local cuisine. The company also operated a catering business out of the restaurant.
Haumea Hebenstreit, vice president of Diamond Head Management, said that the company and Bishop Estate mutually agreed to terminate the lease.
She said that the company hopes to hold a going away party for employees during the weekend that the restaurant is scheduled to close.
Hebenstreit said that Ho hasn't ruled out reopening the cafe if the business climate improves.
"He tried to keep the kids in the community working there," Hebenstreit said. "He hasn't given up on that place and he may do it again in the future. He really has a soft spot for that place."