For more than a quarter of a century, customers walking into Furin’s bakery on M Street NW in Georgetown could count on three things: fresh cakes (of the birthday and cupcake varieties), owner Bernie Furin’s sparkling blue eyes, and a broad smile spread across the cherubic face of his wife, Wendy Kerr.

Walking into Furin’s the last week of July, however, customers were greeted by a markedly different scene. The baked goods, as well as the assortment of salads, sandwiches and comfort foods, were there as always. But Bernie Furin’s eyes brimmed with tears, and Kerr, who seems never to stop beaming, was sobbing.

“I’ve been crying myself stupid for weeks,” said Kerr, 51.

After 27 years in business — and drawing in longtime Georgetown residents, famous fans such as Karl Rove and Al Pacino, and tourists making the trek from the Foggy Bottom Metro station — Furin’s closed its doors for good July 31.

Listening to the Furins and their customers tell the story, the circumstances are heartbreaking: The high rent before the Furins purchased their building at 2805 M St. seven years ago. Skyrocketing property taxes. Rival businesses. Increasing food prices and the reluctance to charge customers more.

A bad situation was only exacerbated by Georgetown-specific issues — a dearth of parking, the lack of a Metro station, a moratorium on liquor licenses and costly work required to rehabilitate aging buildings.

Is Furin’s merely an example of the normal business cycle of Georgetown, or a sign of larger problems to come? Do mom-and-pop shops have a place in the neighborhood or are national chains destined to take it over?

“I lost almost $150,000 in two years,” said Bernie Furin, 77, who has worked 12 to 14 hours a day, seven days a week since he set up shop in 1984. “I’ve been on Social Security, $400 a month, for two years. Most of that went to payroll for my staff. There was no other way.”

John Hays, a second-generation owner of the Phoenix, a 56-year-old clothing store on Wisconsin Avenue at P Street, said the neighborhood isn’t destined to live out its future as a large outdoor shopping mall for tourists — a fear among many small-business owners — just because its retail landscape is changing.

“It’s a roller coaster — a pendulum,” the Georgetown native said. “Old stores close, and new stores open. This is something that happens in cities. No urban center is immune.”

Not even Georgetown.

At the turn of the 20th century, Georgetown was what Billy Martin, the third-generation owner of Martin’s Tavern on Wisconsin at N Street and a Georgetown history buff, described as a “very blue-collar neighborhood.”

“What many people don’t know is in the early 1900s, it was primarily African American. It had a seaport and a coal facility,” said Martin, as well as a lumber yard, a cement plant, a flour mill, a textile mill, a paper factory, a power plant and a garbage incinerator, according to the National Park Service. The NPS also notes that in the years after World War I, “Georgetown gained a reputation as one of Washington’s worst slums.”

“Kind of what Anacostia is today, that’s what Georgetown was,” Martin said.

His grandfather, also named Billy Martin, was part of the first wave of post-World War I development in Georgetown. In 1933, he opened Martin’s Tavern on the site of what was formerly a mom-and-pop Greek delicatessen and, before that, the annex of a Civil War hospital next door.

By the 1950s, the vestiges of Georgetown’s working-class roots were scarcely visible; the neighborhood had become home to Sen. John F. Kennedy, and soon after movie stars and government officials began patronizing the restaurants, shops and nightclubs.

In the years since, the neighborhood has seen the development of big projects with varying success and varying levels of support — such as the Georgetown Waterfront and the Georgetown Park shopping mall — as well as a more gradual shift in the type of retail found primarily on M and Wisconsin, the main thoroughfares, away from independent shops to higher-end chain and catalogue stores.

“Family businesses . . . are the heart of Georgetown,” said Susan Hamilton, a 26-year Georgetown resident and Georgetown Business Association member. “You can go to a national chain anywhere. But here you have [the surviving independent businesses] Georgetown Tobacco, Georgetown Floorcoverings, Cannons seafood, Weaver’s hardware, Bistro Francais.”

But a neighborhood and its residents can’t survive on floor coverings, fresh scallops and hand-rolled cigars alone.

In Georgetown, this variety now includes stores such as Barneys Co-op and Restoration Hardware; the beloved restaurant Nathans was replaced by a third outpost of Serendipity, a New York-based eatery known for its pink and white decor and frozen hot chocolate.

“The underlying issue here,” Hamilton said, “is the rent and commercial property taxes.”

Nancy Itteilag, the real estate agent who sold Furin’s, said rents on M and Wisconsin can range from $30 to $70 per square foot, a cost that she and Hamilton think puts pressure on existing independent businesses and can be intimidating and prohibitive for small-business owners looking to set up shop. (Being a chain doesn’t guarantee success, either; American Eagle Outfitters and Reiss are two recent casualties.)

But area business owners said that another issue — onethat is far more difficult to articulate than inability to pay the bills — is the need for a comprehensive, competitive, adaptable business plan. Doing something well doesn’t ensure a long life, either. For example, Hays’s parents, who opened the Phoenix in 1955, built their store on Mexican handicrafts, peasant blouses and folk art. But when Hays and his wife, Sharon, took over in 1979, “we started to change the business,” he said.

“The fashions changed,” he said. “If you don’t embrace change, you just shuffle off,” he said.

Martin agreed: “There’s been an influx of high-end chains in Georgetown, and that’s raised the bar. But you have to match the competition. You have to go the extra mile.” Martin explained that despite his restaurant’s success, he still gets a shiver every time someone asks, “What’s Martin’s Tavern? Where’s that?”

In the final days of Furin’s, the owners began locking up at 5 p.m. instead of 7, as they had for so many years. But on July 29, even as the earlier closing time approached and the staff, already reduced from 19 to 14, cleaned up for the day, the restaurant was still bustling.

Customers indulged in old favorites and said goodbye to their hosts of 27 years. “Walking in here is like walking into my own kitchen,” said David Petrou, a native Washingtonian and Georgetown resident of 31 years.

Bernie Furin, who still yearns to take a part-time job, is officially retiring as his son, Chris, takes the reins of what will be left of the family business. Chris, who had worked at Furin’s since he was 13, will operate a cake catering company , banking on the sweet treats that made the bakery a legend.

“I don’t know what I’ll do with myself,” said Bernie Furin, posing as Kerr took photos of him with customers. He shook hands with the men and kissed all the ladies, jokingly telling his wife to look the other way. Kerr just smiled, shaking her head, and continued making her own rounds. Instead of giving out kisses, she asked for e-mail addresses, which she jotted on a notepad once used for taking orders.

“This is what my life has been reduced to,” said Kerr, still smiling. “A piece of scrap paper.”