Five men crowd together in the small shoe repair shop, their toes tapping and their hammers rapping in time to the music blaring from a small tape deck.

While the Funkadelics sing "Feet Don't Fail Me Now," a short, stocky man props a batered boot on his shoemaker's last and calls the other workers to gather around. He begins to reconstruct the sole, explaining the fine points of leathercraft to his students.

It's a typical afternoon in this not so typical shoe repair shop in Southeast, where youngsters learn "shoe business" from a man the neighborhood children call Peter Bug.

At Peter Bug's Shoe Repair Academy, customers are charged only for the cost of the materials, and senior citizen can have their shoes picked up and delivered at no extra charge. Area youngsters who are interested in learning the shoe repair trade can stop by after school for lessons in heels, soles and customer service.

Until March, the academy was just a dream for 28-year-old John Francis Matthews, who earned the nickname Peter Bug from the souped-up gold Volkswagen he drives.

Raised just a few blocks from the small building at 1320 E St SE that houses his academy, Matthews learned the basics of shoe repair at Phelps Vocational High School and studied advanced leathercraft at Oklahoma Technical Institute.

A warm, friendly man who has become a father figure to local children in his neighborhood Matthews studied anthropology and sociology at Federal City College because he said he wanted to learn something "that would relate to man and his surroundings."

After graduation, he worked at several area shoe repair shops and taught shoe repair at Phelps. He got the idea for a shoe repair academy in 1975 when he was working as an adult supervisor for the D.C. youth courtesy patrol-a D.C. Recreation Department program where youngsters servce as escorts to older citizens along city streets.

"I like working with kids and I can fix shoes, so I thought I'd try to start a shoe repair academt," would "help kids solve their problems and learn a constructive trade."

He spent a year and a half mapping out his proposal, which he submitted to his Capitol Hill, area Neighborhood Planning Council in October 1977.

To show their support for the proposed academy, about 75 adults and children attended the NPC meeting the night the council was to vote on Matthew's plan.The council adopted the proposal and alloted the academy $7,500 for 1978-79.

The D.C. Recreation Department, which administers NPC youth programs, found a home for the academy by renovating a tiny, abandoned building that had been an annex to Buchanan Elementary School.

The brick building borders a city park, dedicted by Lady Bird Johnson, on a blocked-off street known as Sesame Street. A shoe repairman who was going out of business sold his equipment to the new academy at a bargain rate, and Peter Bug Shoe Repair Academy was born.

The neighborhood turned out for the grand opening in March. Matthews spent $500 of his own money to rent carnival rides and purchase food that he distributed free to the approximately 700 celebrants.

"We called it the first annual Bugzilla Day Festival," Matthews grinned, pointing to pictures of the event that he has taped on the wall-photos showing local politicians Marion Barry and Hilda Mason enjoying the party.

Twenty students are enrolled at the academy, and business is fine, Matthews said. Several regulars come by every day after school to work for several hours, while others study one or two afternoons a week.

"We teach the basics-a student first has to take a shoe apart and put it back together," Matthews said. "Hopefully, students will be creative, but have a little bit of Peter Bug in them, too.

"We also teach customer relations. A 14-year-old has to learn how to take shoes from a 36-year-old customer. It's not for you to argue with the customer, you should make his day a little more pleasant.

"And a shoe repairman is like a cab driver-he's got to know a little bit about everything-politics, sports-because waiting for your shoes can be boring."

Matthews' students say they've learned a great deal apprenticing at the shop.

"I figure it's a good job because a whole lot of people need shoes fixed," said Darnell Pringle, 17. "It's a really good place."

"I've got a lot of shoes at home that wear out, and I got interested in fixing shoes," said Eastern High School senior Clarles Kingsland who attends the academy each weekday from 4 to 7 p.m. "I've learned the basic fundamentals of taking heels off, making half soles and whole soles.

The Peter Bug Shoe Repair Academy is one of 168 NPC-developed programs in the city, said Curtis Taylor, chief of the D.C. Recreation Department division of community-based programs for children and youths. Other skill development and training programs for youths include a ceramics factory, tutoring services and a health clinic.

"The key to the concept is that these programs are controlled by community people, not bureaucrats," Taylor said. "John Matthews is very in tune with what's going on in the community.

"And the concept of that program is one of the most valuable we have, because youngsters are being trained in viable trade while providing services to senior citizens." CAPTION: Picture 1, "Peter Bug," center, gives instructions to Stephanie Matthews, left, and Charles Kingsland on the art of shoe repair. By Craig Herndon-The Washington Post; Picture 2, "Peter Bug" with the monogrammed, souped-up, gold Volkswagen he drives, to the delight of neighborhood children. By Craig Herndon-The Washington Post