The diner was once a hardware store owned by Luke's father. After his death, Luke wanted to keep the hardware store, but turned it into a diner instead. Above the diner, there is a small apartment where Luke lives. Eventually, he buys the building next store and expands the apartment.
Luke, Caesar, and eventually Lane are the only real servers in the diner. Lorelai and Rory even take over for a short period of time when Luke's uncle dies. Luke rarely ever closes the diner. He stays open almost every day, even Thanksgiving. On his dark day, the day that his father die, and his vacation with Nicole.