Hungry Charley's restaurant, on the verge of becoming the second Harvard Square restaurant to close within two months, will institute new policies next week in a last-ditch effort to avoid financial doom.

John McNally, supervisor of the restaurant, said yesterday that he will raise prices by 10 cents per item and institute waitress service in order to make the restaurant more appealing to students.

Hungry Charley's is losing $1700 per week, and McNally said that if the situation does not improve the restaurant will probably close within a month. Hazens Food Shop on Holyoke St. has been closed since last month.

"Students don't want to come into this restaurant because of the street people," McNally said. "If our new policies don't get rid of people hanging around, we probably won't attract enough business to stay alive."

$87,000 Lost

McNally, who supervises two other Hungry Charley's branches, said that the Cambridge store has never been successful and that it has lost $87,000 in its three years of existence.

Two years ago a shooting and several stabbings took place within the restaurant. McNally said that the incidents earned his restaurant a poor reputation and that he has never been able to convince students that the reputation is false.

"I want this place to appeal to students," McNally said. "It should be totally clean in all ways, and I think what we're starting next week will help."

Several restaurants, including Legal Sea Food in Inman Square, have expressed an interest in purchasing the store, but McNally said the central management of Hungry Charley's has given him a free hand in deciding the fate of this branch.

Hungry Charley's, located at 1380 Mass Ave, opened in the fall of 1970, replacing a Waldorf Restaurant branch.