It's lunch hour and standing room only in the King Street Deli, a humble pizza and sandwich shop in Old Town Alexandria on the centuries old commercial strip from which the restaurant takes its name.

Gretchen Bell, the deli's 23-year-old proprietor, is a whirl of service: shoveling steaming mushroom-with-extra-cheese pizzas into white cardboard boxes with one hand and stretching out her free hand for a bag of potato chips to stuff in a brown paper sack for the next order, a crab leg sandwich and diet cola to go.

"Next, please," she sings, her face shining with perspiration, as customers continue to gather in front of the deli's cash register. There, Bell's fiance, Jacob (Jake) Rizik, 25, is punching the keys with a gambler's grin and chatting with the customers as he takes their money.

"We just always knew we would be so good at business," Bell explains. "We felt that with our energy, this would just take off."

In the beginning, it seemed that Bell's confidence was justified, and she and Rizik were well on their way to realizing their carefully nutured dream of owning and operating a successful business. The dream began to take form last November, when they pooled $20,000 they had saved, borrowed and inherited from relatives and made a down payment on the King Street Deli.

At the time, Bell was a receptionist for a District lobbying group, and Rizik, a slender, bearded Palestinian, worked for a local courier service.

"We came home one hot day in August after working real hard and looked at each other and said we were never going to work for anyone else again," says Bell, a chubby bundle of kinetic energy with a semipermanent smudge of flour on her round cheeks.

"We felt we had to do something for ourselves to build a future," Rizik says. "Then we would go back to school. Jobs weren't paying much, anyway."

And, in a matter of weeks, a good portion of the wandering herds of tourists, office workers and chronic shoppers who daily crowd Old Town's brickwork sidewalks actually came to like not only the deli's offerings but, perhaps more importantly, Bell and Rizik themselves, their friendliness and their desire to please.

It was then, however, that the bureaucratic avalanche began that threatens now to bury the couple's heady taste of entrepreneurial independence under a mountain of regulations, crossed purposes and contractual misunderstandings.

Four months ago, after the little restaurant had apparently met all of the city's regulations to open, a city health department inspector visited the deli, and the pizza, so to speak, hit the fan.

"All of a sudden, someone from the health department comes in and looks around," Bell recalls. "He says, 'You have to put in a second public restroom to keep your tables and chairs.'

"We said, okay, we have another bathroom. All we have to do is clean it up and paint it and we'd be all set," Bell says.

The next morning the inspector called again, Rizik says. The good news was that he told the couple the extra restroom was no longer necessary. The bad news was that he told them they had to remove the deli's five tables and chairs because the restaurant doesn't have a special use permit to operate as anything more than a carryout restaurant.

Now there is seldom a day, Rizik says, that people don't come in, notice that there isn't any place to sit and leave to spend their money elsewhere.

"We're losing 50 percent of our business on weekends and 30 percent during the week," Rizik says.

But there are still the faithful few.

G.H. Stee, 84, stood at the counter recently to eat his lunch. He says he thinks the city is trying "to squeeze out the little guy" with its regulations.

Michon Griswold, who says she usually beats a path for one of the deli's two table-top video games for a place to munch her meatball submarine sandwich, says Bell and Rizik deserve a break.

"They are really super people. They are really nice," she says. "I like talking to them, and I really want to see them do well. And this place? It's still nice, even though there isn't any place to sit down."

For months, the couple has unsuccessfully sought a special use permit from the city for permission to reinstate the tables and chairs and has tried to work out a compromise with the owners of the building at 128 King Street, where their deli is.

An attorney for the King Street Limited Partnership suggested that the couple work out a deal with another of the company's tenants, another deli owner who had moved his restaurant--complete with tables--into a nearby building on the assurances that his neighbor was strictly a carry out.

Last week, negotiations broke off after the two deli owners were unable to agree.

"I really feel sorry for Bell and the predictment she's in," says Frank E. Brown Jr., the attorney for the partnership. He suggested that perhaps she use her pizza oven to bake carryout fudge instead of pizza.

The suggestion frustrates Bell. Exhausted and depressed, she looks over to Rizik standing behind a silent cash register and says: "I just feel like, God, don't they know this is our first business?

"All we want to do is make pizza."