Barracuda has become a stealthy predator, armed to the teeth

It isn't hard to figure out why Barracuda is one of the snappiest retail operators in the industry's shark-infested waters these days. "In two-and-half years, nobody has left the company," says chief executive Mark McQuater. "We must be doing something right!" But, commendable though that fact is, there are other more obviously operational reasons why the managed house business ­ now boasting just over 140 outlets ­ is starting to become one of the most admired. The carnage on the high street affected most gravely the deep discounters and those paying punitively high leasehold rents. "Across the estate as a whole we are 80% freehold. The Varsity bars are 100%," McQuater explains with understandable satisfaction. "You won't see us spending silly money on refurbishments from which we couldn't possibly make a return, and you won't see us paying fancy prices for leasehold properties." Barracuda acquired the 22-strong Varsity chain from Wolverhampton & Dudley during the regional brewer's root-and-branch reconstruction. Aimed, as the name suggests, at the student population, they're contributing handsomely to an average sales figure of £13,000 to £14,000 a week. Some of the Old Monk sites rescued from the collapse of Gerry Martin's venture are pulling in a lot more than that, and they'll be turned into either Smith & Jones or the new Barracuda Bar concept. But, overwhelmingly, it's the Smith & Jones brand ­ "more pub than bar" ­ that is giving McQuater and his team the most cause for pride. Developed originally by the innovative John Connell, they were sold to Ambishus and then on to Barracuda. They now make up just under a third of the total estate. We meet in the Old Monk just around the corner from the City of London's swanky Barbican development ­ and he's looking pretty pleased with himself. "You know, we wouldn't need to do much to this place at all. It already looks pretty much like a Smith & Jones, so there won't be any huge spend here," says McQuater. In fact, Barracuda keeps a very firm lid on capital expenditure as a matter of policy. "I really can't understand how some of our rivals out there have got themselves into cash-flow difficulties," he goes on, warming to this theme. "Cash flow is central ­ crucial ­ to any business." But then he's fortunate enough to be backed by the venture capital arm of Prudential ­ and there's the rub. "We have a Prudential guy on our board, and when we meet every month the first item on the agenda is how's cash flow going? Have you got enough money?' That focuses you. "If we wanted £100m to buy something big, we could get the money. I'm not saying we'd do it, but it's good to know that kind of facility is available to us." Expansion, in fact, has been fairly conservative. "We've actually sold 40 pubs, which people don't perhaps realise," says McQuater, who himself founded Barracuda after spells everywhere from Scottish & Newcastle through to Tom Cobleigh and Wetherspoon ­ still the most rampantly expansionist company in the sector. "We'll grow, typically, by 25 pubs a year. That's a rate I'm absolutely confident we can sustain." Gearing is "surprisingly low", insists McQuater, but, as the boss of a privately-owned company he's not duty bound to reveal the exact figure ­ and doesn't. But it's believed to be around 55% ­ and that would support his contention that he has plenty of room for manoeuvre. Barracuda began life with 35 ex-Greenalls pubs in 2000, and since then, life at head office and at the operational coalface has been hectic but remarkably panic-free. Eyebrows may have been raised when McQuater left Wetherspoon after a short term, having not seen eye-to-eye with chairman Tim Martin on some issues, but he's avoided the flak that has overtaken rivals who have over-reached themselves. But what's next? Flotation? "In a different economic environment, we'd be ideal candidates," agrees McQuater. But, like John Sands at Pubmaster, he's in no tearing hurry to go to the stock market. "We are not under the full public gaze of the City, and at this stage we see no reason to change that," McQuater states. "Things could be different one day, of course, but at present there are no plans in that direction." So instead of cosying up to the gunslingers in the square mile, he can concentrate on building the business. The future will see more late-night openings, with or without licensing reform, and possibly the odd new brand or two ­ a sports bar venture looks to be on the cards. Maybe it's because he spent time working for the NatWest Bank ­ his only foray outside the licensed trade ­ that McQuater displays an almost obsessive determination to run the tightest of ships. A distinct lack of "flash", however, shouldn't disguise the passion. "I think we know what we're doing," he says, with a wicked twinkle. The facts thus far bear that out.