After his tavern went bust, Tadakazu Kachi had nowhere to turn until he had a chance conversation with the elderly owner of a drinking establishment that was thriving.

The encounter opened his eyes to a new twist in the business of running an "izakaya" pub: have retired corporate warriors aged 60 or older work in the kitchen, greet customers and handle the bookkeeping.

Kachi, 58, decided to take another stab at being a pub proprietor in July 1998. He launched Kokoro-no-Izakaya (Heartfelt Pub) in Tokyo's Itabashi Ward and staffed it with seniors.

His idea has proved so successful that he now boasts seven pubs under his direct ownership and two franchisees. He also has plans to set up a chain of 60 izakaya across Japan within this year in cooperation with local firms and business owners.

As Japanese society ages rapidly during a time of prolonged recession and corporate restructuring, Kachi's outlets provide jobs to retirees who still want to work. Analysts said the work and chatting with younger customers can be a source of comfort for them.

One 28-year-old woman who works at a hospital near Kokoro-no-Izakaya is a regular who enjoys talking with the pub's manager, Setsuo Takahashi, 58.

"He's easier to talk to than my father," she said. "He listens to me and gives me good advice."

Takahashi has been working two jobs since Kachi asked him to manage the pub when it opened. Though he is also a company employee, he intends to devote himself to the pub when he retires. Talking with patrons is "stimulating and enables me to bring out my abilities," he said.

But employing older people can pose challenges. Kachi said payroll costs were higher than expected as he had three retirees doing the work of two young people.

Still, by cutting costs while expanding, the business turned a profit last year.

Kachi, who is aiming to have 1,000 pubs in Japan employing 80,000 retirees, said his success is based on his philosophy of giving the elderly a useful role in society and a sense of pride in creating a popular izakaya.

Mutual trust between himself and his staff, he said, has generated job devotion in the latter. They hand out fliers advertising their tavern in their spare time and have planned and prepared smorgasbord lunch specials.

While the Ministry of Health, Labor and Welfare has earmarked 7.3 billion yen in its fiscal 2001 budget to help elderly people find jobs through technical training initiated by business groups and public job-placement centers, Kachi has doubts about the plan.

"What's the point if there are actually no places accepting the elderly, even when there are job training facilities for them?" he asked.