U.S. Markets closed

Starbucks CEO makes case that boosting employee wages and benefits increases customer visits

Starbucks (SBUX) CEO Kevin Johnson outlined how boosting wages helps the business, as the coffee chain heads toward a $15 minimum wage for all U.S. partners in the next two to three years.

"[We've] always invested in our Starbucks partners and wage and benefits. That's a good investment to make because if we care for our partners and invest in them, they create that customer connection, and if customer connection scores go up, we know customers visit Starbucks more frequently. So, that is a very important investment," Johnson told Yahoo Finance on Wednesday.

The executive added that the company has been on the record in recent years in support of an increase in the federal minimum wage.

"[We've] been on our own journey of we always pay above minimum wage and in all the markets where we're part of," Johnson said.

A barista serves up a drink in the drive through lane at a Starbucks Coffee store in south Seattle, Tuesday, Oct. 27, 2020. Starbucks saw faster-than-expected recovery in the U.S. and China in its fiscal fourth quarter, giving it confidence as it heads into the holiday season. (AP Photo/Ted S. Warren)
A barista serves up a drink in the drive through lane at a Starbucks Coffee store in south Seattle, Tuesday, Oct. 27, 2020. Starbucks saw faster-than-expected recovery in the U.S. and China in its fiscal fourth quarter, giving it confidence as it heads into the holiday season. (AP Photo/Ted S. Warren)

In a December letter to Congress calling on immediate bipartisan COVID-19 relief legislation, Johnson shared that the company provided catastrophe pay and service pay while stores were closed during the pandemic, without involuntary layoffs. Starbucks also boosted wages in December by at least 10% for all partners, the internal term for employees, Johnson wrote, adding that all employees already earn above the minimum wage.

Johnson told Yahoo Finance that "roughly one-third" of Starbucks retail partners in the U.S. now earn at or above $15 per hour. He expects all partners in the U.S. to be at or above $15 per hour in the next two to three years.

To offset the wage increases, Starbucks is searching for ways to increase productivity, including using technology to automate administrative tasks.

"[The] combination of investing in our partners and finding other areas of efficiency, we think allows us to continue to do this, while also expanding our margins," he added.

Among the other benefits, Starbucks offers employees health coverage for both full-time and part-time partners, a retirement plan, equity rewards, paid time off, parental leave, and full college tuition coverage for Arizona State University's online programs.

Julia La Roche is a correspondent for Yahoo Finance. Follow her on Twitter.