New McDonald's deal marks Torex recovery
Monday 14 January 2008
Torex Retail, the scandal-hit retail software developer that nearly imploded last year, has started 2008 with a bang by winning a substantial contract with McDonald's to deploy its new point-of-sale system across 35,000 fast-food outlets.
Torex Retail had a disastrous 2007 after an unexpected profit warning triggered a series of investigations into the company's conduct and accounting policies, most notably by the Serious Fraud Office.
The software company's reputation was tarnished and it faced a grim future until it was bought outby the private equitycompany Cerberus, which later sold a third of thecompany to General Atlantic.
The company's new management team argued that winning the deal with McDonald's – which has used Torex's software for a number of years in 12,000 outlets – was vital to the company's prospects.
Mike Greenough, chairman and chief executive of the company, said: "We have had a lot of bad publicity over the past year, and this kind of positive statement is a tremendous lift. Our customers and employees have been dragged through the mud, so it is important for them to see this kind of commitment from such a significant third party."
Graeme Cooksley, president and chief operating officer of Torex Retail, said that the new management team contacted McDonald's within a day of completing the takeover of the company to reassure them that Torex was financially viable.
Mr Greenough said that the company also had to fight off competition from "anybody who is anybody in this sector" for the deal as its competitors looked to take advantage of its woes.
Torex's new software system, dubbed NewPOS-POS, promises to speed up counter and "drive-thru" service, improve order accuracy and make kitchen production more efficient. McDonald's, which will tailor the software for its own needs, will roll the product out across 84 countries.
Torex, which also supplies software to Tesco and Argos, did not detail the size of the five-year deal, but Mr Greenough described it as "extremely significant".He added that the company is set to announce another substantial contract over the coming weeks.
Mr Greenough said that the company, which was losing £1m a day when it was taken over, is now cash-flow positive and has £36m in cash in the bank.
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