Kiwi Renovation Powerhouse Eyes $1 Billion Revenue as Global Expansion Accelerates

Kiwi renovation company and Impact PR client Refresh Renovations is targeting $1 billion in revenue as it expands into the US, the UK, Australian and local home renovation markets. Read more about their meteoric rise in this article by Miriam Bell in Sunday Star Times

The global reach of an NZ home renovation company

Aucklander Jon Bridge is not a builder, but the company he co-founded to tackle inefficiencies in the home renovation sector is now one of the biggest of its type in the world.

Refresh Renovations is one of a growing list of New Zealand-founded businesses that punch above their weight on the global stage, and that is primed for further expansion.

It has over 170 franchised operations in New Zealand, Australia, the United States, the United Kingdom, and the combined global group of operators generates over $100 million in revenue annually.

The company’s franchise operators take on home improvement jobs and use a project management business model to plan and run them. They sub-contract the work to the trades required, and use Refresh’s systems and software to ensure efficiency and consistency.

Bridge, who is the company’s co-founder and director, says this has proved popular with business people and consumers alike, and the latest industry data suggested it had become one of the largest full-service home renovation companies internationally.

But there is scope to grow, and the company is aiming to reach over $1 billion in annual sales, and to increase the proportion of revenue from exports to 80% from 20%, over the next 10 years, he says.

“Traditionally, the home renovation side of the construction sector has been combative, fragmented and price-focused.

Refresh Renovations was founded to address business inefficiencies in the home renovation market.

Supplied / The Post

“It is characterised by thousands of small trade-based builders, and most lack a value proposition, and the required business skills, processes, marketing or technology infrastructure to scale up successfully.

“And the same fragmented industry structure exists in every country that we now operate in.”

In contrast, the other two segments of the sector, commercial and new home builders, are well organised, operate at scale, and have large brands that are run as businesses, he says.

“The renovation market is roughly the same size as the new home market, but generally there is no focus on process or delivering a better customer experience or outcome.

“This has resulted in poor business outcomes and very often a distressing renovation experience for customers.

“In New Zealand, BRANZ research shows about 30% of money spent on renovations is wasted, for example. Budget blowouts are common, and about 20% to 30% of all renovations end in dispute.”

Renovations should be the highest margin segment, as owners want to improve their homes, but traditional trade-based builders competed on price, he says.

“Homeowners are just getting bounced around, time is being wasted and building suppliers are not getting their value-added products in.

The renovation market has an organisational problem, not a skills problem, Refresh Renovations’ Jon Bridge says.

Chris McKeen / Stuff

“In any other industry these dispute and waste statistics would not be tolerated, but people put up with it in renovations because ‘it is what it is’.”

Bridge, a business growth consultant by trade, identified the issue after conducting an analysis of the building industry value chain in New Zealand and globally for some large construction suppliers.

The realisation led him, and his business partners, to establish Refresh Renovations in 2009, with the support of industry suppliers. Like him, they saw room for improvement, and opportunity in that.

It was a structural problem, not a skills one, he says. “Tradies had the skills, but there was a lack of organisation, no project management, rushed quoting, and bad communication.

“Our plan was to build a business model which was more efficient, saved the money being wasted, and improved consumer experience. But also one that boosted the value proposition of the business with better design and costing advice.”

The model they eventually developed recruits business people to run a franchise, and the franchisee then employs the salespeople, project managers, and tradespeople.

It does not involve a standardised plan “because all renos are different”, but it uses a standard project management process, and it is currently rolling out its own, specially built IT system.

“A lot of builders said you can’t have a non-builder running things, it won’t work, but we have and it does,” Bridge says.

The goal was to build a business model which saved the money being wasted, and improved consumer experience, Bridge says.

Chris McKeen / Stuff

“Our complaint rate is now 0.33%, so it is about 60 to 100 times better than the industry average, and that speaks volumes about the need for improved process management within the industry.”

After building a strong domestic business with the initial concept, the company has evolved to offer four franchise brands, including one for landscaping and one for handyman services, and will soon launch one for architects and designers.

It has also recently moved into IT development and has established a subsidiary in India for that purpose. Their developers built the company’s specialist renovation management software, and they have a patent pending for it.

In 2014, it was ranked 28th in the Deloitte Fast 50 awards as one of the 50 fastest growing companies in New Zealand.

The company then started operating in Australia in 2016, and moved into the UK and the US more recently.

Bridge says it retains a focus on New Zealand’s $9b renovation market, and aims to secure a 3% to 5% share of it.

But he saw much of the company’s future growth coming from the US where the market is worth close to $570b, and represents a significant export opportunity, he says.

“We’ve been taking it slowly, but we have franchisees in Portland, Miami, Denver, and three in Texas.

“We will be focusing on Texas as it has the regulatory framework that is most comparable to New Zealand, and a larger population than Australia.”

The life span of a bathroom renovation job is about 15 years, Bridge says.

He is not discouraged by the tough economic times as the company first launched during the GFC, and saw the new build and commercial markets drop by about 60%, while the renovation market fell by just 10%.

“That is because different types of reno jobs have different life cycles, so with bathrooms it is about 15 years and kitchens about 30, for example.

“Different life stages also require different reno work, so families with kids require more living space, while older people want safety and accessibility jobs.

“There tends to be lifestyle drivers behind renovations, and then there’s ongoing maintenance and repairs that need to be done.”

All those factors have a greater bearing on the renovation market than economic factors, particularly as people can use equity in their houses to fund work if they had to, he says.

“Having said that, we have seen the market drop a bit, and people are taking longer to make decisions as they wait for interest rates to go down. But it looks like the rate cycle has peaked, and inflation is easing, so that bodes well for the future.”