Hungry for more

Barracuda chief executive Mark McQuater has taken the company he founded from strength to strength over the past five years. Andrew Catchpole reports.

Mark McQuater is an ambitious man. In four short years he plans to almost triple the size of the pubco he fronts and appears unfazed by the challenges of achieving this aim. But then this is the man who named his company Barracuda - after the predatory fish dubbed the "tiger of the sea". Mark's credentials are impeccable. He began his career in the acquisitions division at S&N, before moving into the operations side. At the age of 33 he joined JD Wetherspoon as managing director.

Next came a stint as managing director of the 850-strong Greenalls Pubs & Restaurants business, acquired by S&N in 1999. Then Mark moved to set up Barracuda in 2000 for the £50m acquisition of 35 pubs from Enterprise, followed shortly by the purchase of the 61-strong Ambishus Pub Company estate for a further £36.5m. A year later another 50 pubs were swallowed up during a disposal by Wolverhampton & Dudley Breweries, plus eight more from the bankrupt Old Monk estate.

For all this, Mark shades his hard-edged business instincts behind an affable charm. He pitches up for our meeting at a Smith & Jones in the City of London minus a tie and talks ten-to-the-dozen while popping in curly chips. There's little doubt, though, that he runs a tight ship.

In 2004 the turnover of the 155-strong Barracuda Group was up 14 per cent to £94.4m and profits increased by 5.5 per cent. Twenty bars were opened in 2004, with sites including old churches, banks, shops and old pubs, and £25m is earmarked for expansion in 2005. And this is a company that didn't exist five years ago.

Barracuda, with the hunter instincts of its namesake, has moved fast to corner what Mark describes as an under-exploited niche in the market. "Our outlets are neither in the scrum of the high street or out-of-the-way neighbourhood sites," he says.

"We operate primarily in niche places, both in relatively affluent secondary locations in the cities or in smaller towns which have so far been under-served beyond a handful of old fashioned pubs," Mark adds. "There is also a supply of great properties in these areas."

Recent roll-outs of the company's sports-themed Barracuda Bars and food and wine-leaning Smith & Jones sites have been in towns like Exmouth, Chesterfield, Hull and Portsmouth - places which are behind the larger metropolitan areas in terms of modern venues.

Along with the student-focused Varsity bars, these form the core of Barracuda's fast expanding estate which now stretches from the South coast to Scotland.

First impressions are that this is a potentially difficult territory for a managed pubco to operate. It's a difficult balancing act between the full-on branded high street operators like All Bar One and local community pubs. There have been dark mutterings from commentators that the pub and bar market is saturated. But Mark is confident that Barracuda's strategy is well founded and there are plenty of opportunities left to exploit.

"Barracuda is about stealth brands," he says. "It's not about putting McDonalds golden arches over the door - more about having an individual name and identity accompanied by a badge like Smith & Jones, which lets customers know they can expect a certain quality."

So far it's gone well. Barracuda repaid £21m of loan stock to its backers PPM Venture last year and is growing organically via profits raised through its brands. But financial backers are demanding investors and - especially as a managed operator - Barracuda needs to further expand to deliver the level of synergies enjoyed by its major rivals such as Spirit and Mitchells & Butlers.

"The pub market constantly evolves and at the moment this is working in our favour," says Mark. "It's well known that even the upmarket high street operators are finding it difficult. But the upper end of the market is where the growth is, with people looking for diversity, softer brands, a high quality offering, but in a location near them rather than on the high street circuit."

Still, 400-plus venues is an ambitious target. Just how many more decent venues can there be? And, more importantly, what about the competition which, for an ever-dwindling supply of potential high-end sites, is high?

Surely others will fast catch on to the niche which Baraccuda is exploiting.

"Maybe," says Mark. "But at the moment we seem to be the only people doing it and because we can move in a fast and flexible way, I see no problem with us finding suitable properties to grow to 400 or more bars."

This, he says, would be the limit for Barracuda, arguing that with estates above 500 venues the personal input is lost, as layers of corporate bureaucracy smother the originality and people-driven side of the business.

For now, though, Barracuda marches on. Redcar and Melton Mowbray are home to two of the most recent new sites. If you can't place them on a map, then that, says Mark, is part of the point. "These are places with plenty of people who want to go out locally and have a good night, but want something more than that offered by their local pubs," says Mark. "When we open in these towns people come crowding in through the door because no-one else has given them somewhere decent to go."

Mark promises Barracuda will soon be revealing the details of a new initiative. It may or may not involve the roll-out of a new brand. He won't say as yet, but expects to have something to announce around Easter.