The village of Frankenmuth began as a German community in 1845. Its first settlers were among the German immigrants who left their homeland because of poor farming conditions and political unrest. Frankenmuth also attracted people who wanted to convert the Indians to the Lutheran faith. The Zehnder family emigrated from Germany in 1846. A family trip back to Bavaria in the 1950s inspired them to redecorate their restaurant in the Bavarian theme. The Bavarian Inn's motif, accented by a fifty-foot-high Glockenspiel, echoes Frankenmuth's German heritage. Over 20 million meals were served at the inn between 1888 and 1988. A record 5,470 meals were served on October 9, 1982. By the 1980s the Bavarian Inn was recognized as one of the ten largest restaurants in the United States.
Theodore Fischer, a former bartender at the Exchange Hotel (now Zehnders's Restaurant), established the Union House Hotel in 1888. His son, Herman and daughter-in-law, Lydia are said to have begun the tradition of the "All You Can Eat" family-style chicken dinners served here. The William Zehnder, Sr., family, distant relatives of Fischer, purchased the restaurant in 1950 and continued the chicken dinner tradition. In 1959 the Zehnders extensively renovated, enlarged and redecorated the restaurant in a fantasy Bavarian motif. They also changed the name of the restaurant to the Bavarian Inn. A week-long grand opening celebration held in 1959 in honor of the new addition evolved into the annual Frankenmuth Bavarian Festival.