While an uncertain economy can dampen demand for certain types of construction projects, it may also present opportunities for others. The company behind the Redbox+, known for its distinctive red roll-on containers with portable toilets, thinks its model is perfect for the moment.
Belfor Franchise Group acquired Redbox+ in 2021 and the company now has an estimated 90 entities covering 300 locations across the United States.franchise group is Belfort Property Restoration, which generates approximately $2 billion in annual revenue from 140 US locations and multiple brands such as 1-800 WATER DAMAGE, provides cross-selling opportunities for waste services.
While new construction may be slowing in some areas, Belfort sees plenty of tailwinds as mortgage rates rise and home improvement activity remains strong. Waste Dive recently spoke with Doug Smith, Belfor’s senior vice president of franchise development, about Redbox+’s expansion since the acquisition, what led franchisees to get into the resale business, and more.
The following interview has been edited for clarity and brevity.
WASTE DIVE: What have been some of the biggest changes for Redbox+ franchisees and customers since the deal happened?
Smith: When it comes to things like marketing, training, onboarding and procurement, we have entire departments dedicated to it. So I think the level of support that the franchise has received has increased significantly. We’ve added four full-time on-site business coaches — just going around and meeting with our franchisees, reviewing their business plans, looking for growth opportunities — something we didn’t necessarily have before. We formed a Franchise Advisory Council — they didn’t have one like this before — to represent all over the country and speak on behalf of the franchisees.
What have franchisees been saying about how this helps them differentiate themselves from competitors and secure new cross-sell opportunities?
What we’re starting to see is a synergy between Redbox+ Dumpsters, the Belfor Property Restoration company and several of the brands in our franchise family. They use millions of dollars worth of litter boxes every year. Prior to our purchase of Redbox+, for the most part, the bin business went out of Belfor to any number of suppliers. So it doesn’t mean that all of them will be handed over to Redbox+ immediately, those franchisees still have to earn their own money. What we can do is we can get them into all these offices, briefing general managers across the country, and then as long as they have the bins and services that we need as Belfor, they have a chance to secure their business.
Lately, conditions have been tough for waste handlers of all sizes due to labor, inflation and equipment constraints. What are you hearing from franchisees heading into 2023?
Regarding the equipment, I will tell you that the litter box is not a problem for us. We have local and US litter box suppliers who are actually building up a pretty good inventory for us right now. Trucks have been a bit of an issue, obviously chip shortages and some supply chain issues that most people have. However, our order quantity is large.
So we’ve ordered about 12 large trucks. We recently had six come in.all six [trucks] We shot, one new franchisee, and the rest to existing franchisees. Between January and May we will have another six trucks coming in. These will be distributed among existing franchisees looking to expand, as well as some new franchises that we have in the pipeline. So not saying it’s easy, but our size and size and the amount we order does help to be at the front of the line.
Waste volumes have also been difficult to predict over the past few years, although your business has seen an increase in home improvement activity. In terms of residential demand, what are you seeing in the area?
As of September this year, our system-wide sales were up approximately 43% year-over-year. Now that means the whole system has grown, so it’s not all organic. But our same unit sales, apples to apples, were up a little over 10.1% year-over-year.
So we’re still seeing growth and that’s mostly attributable to renovations and some of those specific locations. I think everyone following the news has seen that both commercial and residential construction have started to slow down. Obviously, with the rumors of an impending recession and rising interest rates, we’re seeing some of these buildings coming down. But that’s not necessarily our best pick here at Redbox+. Most of our franchisees specialize in short-term rentals. Some of them are what I call recession resistant. For example, roofs are a big vertical for us. If your roof gets hit, recession or not, it will get hit. So we’ve been involved in roofing, siding, window replacements, landscaping, and remodeling and renovations.
You see people opting out, mortgage rates go up. Maybe it’s the baby boomers who want to downsize, but they don’t want to downsize to a 7% rate. So they’re going to fix up their house, redo the kitchen so it’s more comfortable for them to live in, but it’ll also be ready for sale when circumstances change a little.
I think there’s been a huge shift in investment property over the past few years. If you watch any HGTV show, the first thing they do is put a litter box outside the house and start cleaning it out. And then you have other things that you don’t even think about, like hoarding, which is the space we play in.
New construction is a small percentage of your business, but what are the trends in this area?
Over the last few months, it’s probably been down a couple of percentage points, single digit percentage points. But again, looking at our volumes and talking to our franchisees, they’re really focused on the other categories that I mentioned. I think they want to focus on that anyway, especially once they’re up and running.
When you have a new franchisee coming along, like any business, you’re really eager to take on any business to get your name out there, get started and get some cash flow. But if you start a business and grow and become known in the field, you can pick and choose clients more. Often, short-term rentals—one week, two weeks, three weeks—are more profitable than six, eight, or year rentals.
What else should we expect from Redbox+ in terms of future growth strategy?
One of the things, besides our patent portfolio [portable toilet] Unit, what we really focus on is customer service.
It’s a space not necessarily known for its overwhelming customer service. This isn’t meant to knock anyone down, it’s just that the company is busy, or maybe this isn’t their main business.For some large companies with waste management sites and curbside [collection]Well, commercial bin rentals aren’t necessarily the only thing they do.
We would very much like to pick up and deliver your bin within 24 hours of your call to us. So we really try to focus on customer service, whether it’s the timeliness of a pickup, or getting our powder coated slides under the wheels in your driveway so they don’t get scratched and damaged. Once we acquire customers, we tend to keep them.
Should we expect Belfor to make other waste acquisitions in the future, or is this more of a one-off?
I think it might be a one-off now anyway. We have such a need within our own company to use bin rentals, so it made sense when it showed up on our desks. This is a natural synergy with the parent company and the many other brands within our franchise group.So we’ve got an insight of “Wow, we’re spending a lot of money on bins, this is a bin company [and] We already know what it can do within our company. ”
Not only do we continue to add franchisees, but most of our franchisees are also growing this year. Add dozens of bins to each location, add trucks like I mentioned before. So, as their reputation built, they expanded geographically, buying more territory, and increasing the number of trucks and dumpsters. We’ve had pretty impressive growth this year. I expect this to continue for the next two or three years.
We hear that fewer people may be entering the trash business as entrepreneurs these days, although rolling collection is sometimes easier to get into. How do you see what motivates franchisees to get into the business now?
If you’re going to go into the waste industry, obviously breaking into curbs or something, you’ve got 800-pound gorillas today, most of them already in that field. You’ve seen a lot of consolidation in this space over the years.
But I think it’s a shorter putt to try and break into [this space]. It’s expensive and the equipment is heavy, but it’s not like buying a fleet of garbage trucks and servicing a county or state. So while it’s still a bit capital intensive, I think it’s more economical.you can get a [Small Business Administration] Loans are used to purchase most equipment.
Another part of the business is that it is not labor intensive. Everyone knows what’s happening in the labor market right now. You’ll need a driver or two, and that’s it, to get started. So if they’re working on concepts in the service business, like restaurants and other things like that, retail stores, you have to manage more employees and handle all the work issues there, so that’s a big positive about today’s labor.
Then repeat business. This is regular business. You work with these roofers, sidemen and gardeners. They are killing it now.then pricing [is another factor]. We have combo units so we can be a little more efficient than people who book litter boxes and potties separately.
We’ve also seen in COVID that people really like that unit because of safety and health concerns. People don’t want contractors to be in and out of their house all day. And I think a lot of people still feel that way. So I think that’s an attractive part of the model as well.