Refresh is a specialist builder focused on home renovations, first established in 2012 as an extension to Traffic, one of the New Zealand building industry’s leading business strategy and marketing company and consultancy. “While Traffic has traditionally been a consulting company, we noticed an opportunity in the building industry; a huge gap in the construction market for large-scale national renovation companies,” says Director Chris Caiger. In the 3 years since Refresh was launched, the company has established 35 franchise locations across New Zealand, with long-term goals of global expansion through the use of its carefully developed business model. “We are currently bringing it to Australia, and next year, we’re bringing it to America,” Chris says. “Out of the 650,000 renovation companies currently operating in America, if you took Refresh there right now, we would be the 8th biggest.”
Franchise Manager Matt Steele points out that this is a relatively unique direction for a professional franchise to take. “Most franchises start from a trade skill, and then they get a business model that works and then they scale that up. We’ve come at it the other way around; we’ve looked at the market, we’ve done the analysis, and we’ve figured out what’s really not working well in the building industry, which is sales, marketing, systems, and processes; that’s really what we’re good at, that’s our strength.”
Offering a full, end-to-end design and build service, Refresh is capable of taking on any renovation project, even those that that require multiple trades. We go right from the concept plans, the working drawings, feasibility and costing estimate, to getting the consent, and then building the project,” Mr Caiger says. According to BRANZ, New Zealand’s building and research association, a client that chooses a design and build service such as Refresh will experience better project management and customer communication, and can save up to 30% on their renovation. “We do everything from one point of contact, so the homeowner only has to deal with one person.”
Before entering into a new market, Refresh analyses the prospective area, establishing the amount of capital available within the renovation market. “Sydney spends about $6.6 billion a year on renovations, so we’re setting up 66 franchises there,” says Chris, “Brisbane is about $3.3 billion, so there is going to be 33, Melbourne is about $6.4 billion so there with be 64.” Refresh intends to attract franchisees that are business oriented, come from general management, sales, or marketing backgrounds, with a desire to run their own business. The target for new owners will be to grow a $3-$5 million business as a minimum, in a territory that approaches $100 million on average. “One of Refresh’s key points of difference is that, while many franchisors need people to be doing the work in the franchise, that is not the case with us,” says Matt. “Franchisees need to be good managers of their staff, especially staff that does the work, so it’s the staff that would do sales and the staff that would perform the project management.”
While the renovation market is currently 5 times bigger than the fast food market, Refresh has no present competition, Matt says. “We are the only company with our model, but we are 5 times bigger than the fast food market.” Distinguished by its head company, a leading marketing group, Refresh operates under similar values. “We are a marketing company that is all about the power of our brand and we’re using that to build scale,” Chris says. “We’re focused on creating as many leads as we can, and giving the best depiction of the brand as possible.” Refresh has built sophisticated, cloud-based IT systems that franchisees use to manage leads, convert them, and carry out the project. The company has also benchmarked its franchisees against each other, allowing for the determination of ideal margins, conversion rates, conversion time frames, and project sizes. “We use that benchmarking data to learn across the business, and then use it to improve all of the franchisees.” Refresh also publishes its own magazine, Renovate, which is sold through supermarkets and bookstores, boasting thousands of subscribers. “It’s a standalone magazine, but the main reason we publish it is to get the content, so we can bring quality content onto our website. Every three months we put a magazine’s worth of content onto the Refresh website, which is why it’s ranked so high and gets so much traffic. No other building company has anywhere near that much content.”
In late 2014, Refresh was the winner of the Deloitte Fast 50 award, as one of the fifty fastest growing companies in New Zealand. The year before, the company received an interactive Media Award for the best website in the construction industry on a global scale, alongside McDonalds in the food industry, Disney for entertainment, and GoPro for electronics. “We decided early on that the website was the core part of our marketing platform, because potential clients always look online, both for inspiration and to find their builders,” Chris says.
Refresh has built a strategy based on alignments within the industry, a major differentiation from other builders. “The building industry has a long value chain,” Mr Caiger explains. ”There’s raw materials, product manufacturers, distributors, subcontractors, builders, and, finally, the consumer. Normally in the building industry, they all fight with each other over price and services.” Refresh saw such practices as a massive waste, as despite the country’s large renovation market, many clients were having very poor experiences with their builders. “We decided to line the value chain up, and harness all of their resources, so that instead of fighting, they’re co-operating.” By working closely with its supply partners, Refresh receives detailed product information, training, and marketing program support, as well as connections with partnered contractors. Refresh also maintains close ties with the Franchise Association of New Zealand, as well as its insurance company, which organises the insurance for both consumers and franchisees, including home warrantee insurance, which is very popular in Australia.
Chris views the present shortage of builders, designers and subtrades as a significant challenge for the future of the industry. “We need to secure those resources; those are the main shortages that we’re going to be facing.” As a company, the greatest issue that Mr Caiger foresees is the acquisition of the resources needed to grow proportionally with increasing client demand. “We’re getting a lot more inquiries for franchises,” he says, “but it takes a long time to bring these people through the process. It’s a lot of time and resources, so we’re going to look at how we can do that with technology.”
The next step for Refresh will be its imminent expansion into Australia. “The construction markets of New Zealand, Australia, America, the United Kingdom, and the majority of Europe are very similar in structure, with an extremely fragmented renovation sector, and a highly consolidated new home sector,” says Chris. “Our intention is to expand the Refresh model from New Zealand, where its effectiveness was proven.” After establishing the brand within Australia, Mr Caiger intends to take it to America, followed by many other potential markets. “We want to create a global, multi-billion dollar building company focused on renovations,” he says. “There are a lot of specialist trades, such as plumbers and electricians that are in franchising, but not at the next level, which is the builder and renovations or remodelling.” Matt notes that several companies have already made numerous failed attempts at entering the American market, largely due to their business model’s orientation toward cookie-cutter, pre-designed constructions. “That’s made people wary about the segment,” he says. “Others have attempted to scale up their operations, only to fail as well, because they lacked the strong marketing required to drive such scale. You also need a very strong platform, business model, practices and systems to manage that scale. There’s a lot of investment that needs to go into it to make it work, but once you’ve got that, it’s very effective.”