In Washington there are a good number of fine restaurants and fine neighborhood, but rarely are the two in proximity or conjunction with each other. There is an absence of ethnic flavor, the kind which exists in the working-class taverns in Chicago or Detroit, or in the little family owned restaurants which cater to a limited neighborhood clientele in Milwaukee or Gary, Ind, or on the lower East Side of New York.

The north side of this city is rich in ethnic character. From the mid-19th century there has been an influx of Europeans - predominantly Germans, Italiand and Poles - drawn by the city's industry. Of course, the restaurants have grown in the image of their patrons.

One such place is Gruen's, a cozy spot occupying the lower floor of what used to be a sizeable home. It had been an institution at the corner of Butternut and Briggs Streets 80 or more years, growing and changing with the face of the neighborhood. It was a grocery near the turn of the century; a speakeasy during prohibition.A bar and grill through World War II. And a restaurant reflecting the German birth of its owner. From 1949, Theodore Gruen's restaurant served up sauerbratena and pan-fried noodles and potato pancakes and spiced red cabbage and knockwurst and bratwurst and kloese and wienerschnitzel to customers whose national heritage fostered those delicacies. But from the beginning, Ted Gruen also served hamburgers and roast beef and turkey, each with his own loving touches.

In 1972 the restaurant changed hands - after 22 years, Ted Gruen sold his corner restaurant to Angelo Albanese, a native of the area whose ancestral roots were in Naples. The immediate expectation was that the German influence of Gruen's would be replaced by the Italian. Not so. Albanese, knowing the history of his restaurant, kept the name. He kept Ted Gruen's Polish sous-chef - Francis Childs - and promoted him to chef. Albanese also kept the menu patrons had come to know by heart. The only change was that Albanese's Italian friends began stopping by for wurst and sauerbraten; then they brought their friends, and the cycle continues.

The success of Gruen's lies in a number of areas, the principle concern being attention to quality. The soups are made from scratch. The meats ordered and selected with home-like expectations. The sauces are made without extenders, chemical flavorings or other artifices common among restaurants trying to stretch a dollar. It is well-prepared food in copious quality.

The specialty of the house is sauerbraten - a traditional German dish prepared in a number of ways in the various regions of Germany. It is always a sweet-sour dish, pungent with spices and loaded with tender slices of lean meat. Ther are three methods of preparing sauerbraten. Most cookbook authors talk of 48 or more hours of marinating raw beef in a liquor of vinegar, water and spices. A large number of German-American housewives make their sauerbraten from leftover roasts or already cooked beef. The third method uses raw meat and a pressure cooker, and that is the method used originally by Ted Gruen, which continues to be used at the restaurant bearing his name.

The following recipes are courtesy of Angelo Albenese and Chef Childs of Gruen's. SAUERBRATEN (Serves 6 to 8) 3 pounds or slightly more whole eye of round roast %2 cups water 2cups cider vinegar 2 ribs celery with leaves 2 large carrots 1 medium onion 1/2 orange 1/2 lemon 2 tablespoon picklings spices 1 cup light brown sugar 1 cup catsup 1 1/4 teaspoons ground allspice 1 1/4 teaspoons ground cloves 4 teaspoons arrowroot or cornstarch

Cut the celery, carrot, onion, orange and lemon into four pieces each.Place the vegetables in a pressure cooker, along with the meat, water, vinegar and picking spices. Cover and place over low or low-moderate heat until pressure builds to about 15 pounds. Cook at 15 pounds pressure for 1 hour and 15 minutes. Reduce the pressure and remove the roast to a holding platter. Strain the stock into another pot, discarding the vegetables, spices and fruit.

To the stock add brown sugar, catsup, allspice and cloves. Bring the mixture to a slow boil for about 5 minutes, stirring regularly. Then add arrowcoat after dissolving it in 1 tablespoon cold water.

Reduce heat to low and stir the sauce until it begins to thicken. Slice the roast in 1/4-inch slices and add the meat. Simmer over very low heat for about 5 minutes or until the meat is heated through. Serve over buttered or pan-fried noodles. POTATO PANCAKES (Makes 8) 2 pounds potatoes, peeled 1 medium onion 1 medium onion 2 eggs 1/2 cup flour 1/2 tablespoon parsley flakes Salt and white pepper 2 1/2 cups vegetable oil

Chop the onion finely and put the potatoes through a grinder or grate them finely, allowing them to drain for at least 5 minutes before starting the batter. Combine all of the ingredients except the oil in a large bowl. Put the oil in a large bowl. Put the oil in a heavy iron skillet over high heat, until the oil is just below the smoking point. Using 1/2 cup of batter per pancake, make the pancakes two at a time, turning only once and reserving the finished product on a serving platter. Serve hot with apple sauce, spiced peaches or sauerbraten. PINEAPPLE FRITTERS (Makes about 10) 5 tablespoons sugar 1 egg 4 tablespoons milk 1/4 cup drained crushed pineapple 1/2 teaspoon baking powder 4 tablespoons melted shortening Pinch of salt 1 1/2 cups flour (approx.)

Combine all ingredients adding the flour as the final step, one-half cup at a time, until the batter is a little thicker than bread dough. Roll the dough into balls - about the size of golf balls - and deep fry in hot oil until they turn deep gold in color. Dust with sugar.