MINNEAPOLIS (WCCO) — Starbucks is reporting higher profits, despite having to pay some of its employees more.

Starbucks says its store operating expenses are 18 percent higher than they were a year ago. The company says the main reason is because cities are raising the minimum wage.

Starbucks CEO Howard Schultz has spoken out against a wage hike, saying it will come with hidden consequences.

Earlier this month, Starbucks announced a price increase on most of its drinks at stores across the country.