The Fourteen Percent

The question

Every restoration owner has heard the explanations. You are in a small market. You have not been open long enough. Your state is soft. You did not get the weather.

These are testable. Franchise systems file their locations’ revenue with state regulators every year, and those filings are public. So we took 87 of them, pulled the revenue of individual offices along with each one’s territory population and the date it opened, and asked a plain question: how much of the difference between offices do the usual explanations actually account for?

Fourteen percent. We then added eleven years of NOAA storm and freeze data, on the theory that restoration is weather-driven and the offices doing well simply got more work. Weather added three points.

Everything structural we could measure — how big your market is, how long you have been open, what state you are in, and how much weather you get — explains about a sixth of why one office bills what it does. The rest is how the business is run.

Bigger markets help less than you would think

The relationship between territory population and revenue is real, but it is far weaker than a straight line. Doubling the population of a territory is worth about 47% more revenue, not 100%.

That cuts both ways. An owner in a mid-sized market is not held back as much as they think. An owner in a large one is not owed as much as they think.

Maturity takes far longer than anyone sells it

Tenure does matter, and it matters for much longer than a franchise development conversation tends to suggest. Across 414 office-years, revenue reaches half its eventual lift at about three and a half years, and keeps climbing for two decades.

A first-year location bills about a fifth of what a mature one does. That is worth knowing before you judge a young office, and worth knowing before you buy one.

Note that the curve is not smooth. The 12-to-20 band sits below the 5-to-8 band, which is noise rather than a real dip — the bands hold between 24 and 78 locations each. Treat the shape as a guide to pace, not a target.

Same brand, same decade, opposite outcomes

The clearest evidence that execution dominates comes from following individual offices over time. We matched 58 locations that appear in both a 2017 filing and a 2026 one, under the same owner, in the same system, running the same playbook.

Median growth was 7.7% a year. But the spread is the story: in the same brand, over the same nine years, nine offices more than tripled while eight went backwards. One went from $2.98M to $88,683.

Restoration is not one industry

One structural factor did turn out to matter enormously, and it is the one nobody segments on. Full-service systems — restoration plus reconstruction — run roughly five times the revenue per location of mitigation-led ones.

If you benchmark yourself against “the restoration industry” without accounting for this, you will get a confidently wrong answer. A mitigation-only business sitting exactly at its own model’s median looks like a failure against a blended average.

Your labor market is not the national one

Public filings say nothing about cost, so for that we went to the federal wage survey. Across 139 metro areas, the median wage for a hazardous materials removal worker — the closest federal classification to a restoration technician — spans more than three to one.

Federal establishment data shows the same variation in how businesses are shaped. Across 5,850 remediation businesses employing 92,091 people, average pay runs $96,364 in Washington against $51,686 in Nevada. California and Texas average around 17 to 18 employees per business; Florida averages 8.

Whatever a national wage benchmark tells you, it is not about your market.

What this means

The honest summary is a negative one. We went looking for the structural reasons behind the gap between restoration businesses, using the best public data available, and the structural reasons are mostly not there. Market size, tenure, geography and weather together leave about five sixths of the difference unexplained.

That unexplained portion is not mysterious. It is job mix, cycle time, pricing discipline, supplement capture, crew utilization, which carrier programs you work and which you decline. It is how the business is run. It simply does not appear in any public filing, which is why an analysis like this one can measure its size but never its contents.

The companion piece to this one puts the same filings to work on a single question — where you stand in your own system.

Where the numbers come from, and their limits

• Franchise filings are franchise data.Royalty load, brand referral flow and national accounts make franchisee economics structurally different from an independent’s. An independent should read the shape of these findings and ignore the levels.
• Item 19 is optional, and self-reported.Systems choose whether to publish revenue at all, so the ones that do are a self-selected group, and the figures come from franchisees rather than an audit.
• The establishment counts cover one classification.Federal data for remediation services counts 5,850 businesses. Many water and fire damage contractors are classified under building services, carpet cleaning or residential remodeling instead, so this is a slice of restoration rather than all of it — and never a count of every business in your market.
• Weather was tested, not assumed.Eleven years of storm and freeze events, cross-validated. It added three points to the model and showed no meaningful relationship to where businesses locate. We report it because it is what we found, not because it is what we expected.

Sources

← All Verinode Research