A remodeler marketing as "we do everything" competes against every other general contractor in the market. A remodeler marketing specifically as "kitchen and bathroom specialists" - or narrower still, like this business's own focus - competes in a smaller, more winnable field, and reads as more expert to homeowners who specifically want that work done well.
Niching down doesn't mean turning away other work; it means choosing what your website, ads, and content are built around. A homeowner comparing a generalist to a specialist for a kitchen remodel usually trusts the specialist more, even if the generalist could do the job just as well.