"We thought, `This was such a beautiful place for the children to grow up,'" Erwin Asam, 58, said Wednesday.
Twenty years later, the restaurant seats 300 and the inn has 72 guest rooms with rooms ranging from $85 to $250 a night.
The restaurant has received a four-star rating from the Mobil and AAA guides each year since 1984.
The Bavarian Inn, which started with five employees, now has 80, making it the second-largest employer in Shepherdstown after Shepherd College.
Shepherd College has grown and Shepherdstown's downtown is filled with bustling shops.
"I'd say it's the jewel of the Eastern Panhandle," Erwin Asam said.
Erwin Asam said he likes to think that some of the town's success has been due to the inn's success.
Carol Asam said it is common to see Bavarian Inn guests walking through town carrying shopping bags from the Shepherdstown shops.
"The area has been good to us and we've been good to the area. Many people have come for a meal at the Bavarian Inn and have decided to come buy a house in Jefferson County because they loved what they saw here," Erwin Asam said.
The Asams will be holding a private celebration soon to mark the Bavarian's 20th anniversary and their 25th wedding anniversary.
Erwin Asam grew up in Munich, Germany, and worked at restaurants in Italy and France before opening Piccadilly Restaurant in Washington, D.C., serving British-style food.
British embassy workers made the restaurant one of their hangouts. Carol Asam worked for the British embassy in communications.
The couple went out on a date and seven months later he proposed. Two months after that they were married.
They said they would eventually like their sons to take over the business. Their oldest son works for an inn in Colorado and another is in college studying hotel management.
They said they thought about retiring to Florida or a Caribbean island, but decided when the time comes, they'll stay in Shepherdstown.