Charlie Yuckapuck and Annie are a cook and waitress at the Daredevil diner. Their zany antics frequently annoy their employer, Mr. Travis, but amuse the diner's other waitress, Magda. The diner attracts all sorts of various figures, ranging from employees that work at the factory across the street, Danny Thomas, and even a Soviet spy, Comrade Olga, who is sent to observe Charlie. Olga's superiors - led by the diminutive "Mr. Big" - believe Charlie to be defecting Soviet cosmonaut Yasha Nudnik, who is hiding sensitive information.
A lawyer comes and announces Magda has inherited a bookstore located on a college campus. Shortly after, Mr. Travis fires Charlie and Annie for their incompetence. Charlie and Annie go to work at Magda's bookstore, followed by Olga. She believes the bookstore to be haunted, and asks Charlie to stay there. Charlie and Annie read that Nudnik is suspected to be at the university for a science convention, and subsequently help numerous odd customers at the store, including two customers who frequently come in and out of the back of the store.
Charlie and Annie become suspicious of Jim Holliston, a friend of Magda's lawyer who comes to help her organize the store's financial records. When someone breaks into the store, Holliston advises Magda not to call the police. After hearing noises one night, Charlie and Annie investigate in the basement, but are scared off after finding the two customers hiding behind the wall. Another night, Charlie and Annie discover a trap door and revolving bookcase in the store. In a secret passageway behind the bookcase, the two find the body of a KEB agent.
During the murder investigation, Holliston eventually reveals himself to be a government agent. He reveals to Charlie his resemblance to Nudnik, and that the KEB are after him thinking he is Nudnik.
While attending a Beatnik party at a fraternity, Charlie is targeted by Magda and her partner. One of the fraternity members shows a romantic interest in Annie, only for her to be dragged away by Charlie. The two run back to the bookstore, where the members of the spy ring have Magda bound and gagged. Charlie and Annie manage to defeat them using the trap door, and smashing a vase over the head of Olga's partner. They are arrested along with the two customers, who turn out to be bank robbers digging a tunnel between the bookstore and a bank neighboring the store. The film ends with Charlie reading from a small note asking the audience not to reveal the end of the film.