A recently opened sandwich shop in a new mall along the 800 block of H Street NE was set on fire early yesterday after burglars with a sledgehammer pounded through a cinderblock wall and stole a bag containing $1,200 in cash, D.C. police said.

Although officials say the blaze was deliberately started, the arson squad is still investigating whether it was the burglars who set fire to the Subs and Fries shop, causing $45,000 in damage, a fire spokesman said. There were no injuries.

On one wall, the words "Jap Go Home" were written with a red marker, leading investigators to suspect that the burglary may have been racially motivated.

However, the Korean owner of the shop, Bong No, discounted that theory, saying that nine of the 14 stores in the shopping center are owned by Koreans.

The incident left No, who was surveying the fire damage yesterday afternoon, wondering whether he made the right decision to open the shop in the slowly reviving area.

"I thought it would be better here," No said in Korean. "I moved to get away from this kind of thing." He said he had previously operated a business in a high crime area of the city that he declined to identify.

No said he opened the sandwich shop five weeks ago thinking it was a good business venture and a safe place to run a business after hearing about the efforts to rejuvenate the economically depressed H Street NE.

In May, Mayor Marion Barry and several D.C. Council members dedicated the opening of the H Street Connection shopping mall, where No's shop is located, and heralded it as an economic "renaissance."

Business life along H Street between Second and 14th Streets NE almost disappeared after the riots of 1968 destroyed dozens of buildings and as street crime and drug trafficking increased.

But in recent months, the number of businesses has increased in the H Street corridor and crime in the area has been curbed by District police.

No said yesterday he was perplexed by the crime. "Who would have figured they would go through the wall?" he said. He said the shop has an alarm system that responds to movement in the front of the store but not the back, where the burglars entered.

Sometime Saturday night or early yesterday, the burglars entered a vacant store adjacent to the sandwich shop to pound out a hole with a sledgehammer, fire and police officials said.

The thieves then took off with a Samsonite bag containing a business license, business checks and $1,200 in cash that was in a storage room in the back of the shop.

A large refrigerator initially prevented the burglars from boring a hole nearby, but they moved five feet and began again, this time successfully pounding a hole in the back of the shop.

At 6:30 a.m., Fire Engine 4 responded to a report of fire in the shopping center, a fire spokesman said.

Looking at the graffiti left by the burglars, No dismissed the possibility of racial motivation and said: "If it was racial, they could have just broken the window. They wouldn't have gone to all that trouble of putting a hole through the wall."

No sludged through the water left on the floor by the firefighters and looked fondly at the remains of the sandwich shop. On the counters were charred plants that were given to him on the grand opening five weeks ago.

"Customers would say what a nice place this was," No said. "It's such a shame."