Raphael (Ralph) Cahaly, 69, founder of Cahaly's Harvard Square delicatessen and one of the area's most popular merchants died of cancer Tuesday morning. Memorial services were held yesterday at St. John of Damascus Church in Boston.

Cahaly, a native of Damascus, Syria, came to this country over 40 years ago, and opened a small variety store with three of his brothers on the corner of Boylston and Mt. Auburn Streets. This was the first Cahaly's.

The store changed locations twice during the next 32 years, and only Cahaly and his brother Michael maintained a partnership in the Mt. Auburn St. establishment.

Eight years ago, Michael Cahaly retired, and a new and expanded Cahaly's was opened under the management of Ralph Cahaly and his son John at the store's present 47 Mt. Auburn St. address.

Although Cahaly turned over the management of the store to his son John nearly four years ago, his face was still a familiar sight in the Harvard Square area.

As a final tribute to one of Cambridge's most distinguished merchants, yesterday's funeral procession drove down Mt. Auburn St., and stopped briefly in front of the store to which Cahaly had devoted so much of his life's energy.