Costa Coffee has said it will increase pay by 5% for the 14,500 staff working at its stores across the UK.
The changes will not affect staff working at Costa's 1,200 franchised coffee shops.
The company also said it would hire a further 2,000 staff to cope with rising demand for coffee following the end of lockdown restrictions in July - and a raft of new locations that are slated to open in the coming months.
Last year, Costa was forced to lay off 609 people due to a drop in business after the pandemic struck - but it now says that it wants to thank staff for their hard work by giving them a pay rise.
As a result, staff members will make £500 to £900 more per year than they did before. The changes come into effect from 1 October.
The company currently pays its staff a minimum of £9.36 per hour. The living wage for London, based on the cost of living, is £10.85 per hour, while the rate for the rest of the UK is £9.50 per hour, according to the anti-poverty charity Trust for London.
Costa staff who oversee the management of stores and the making of coffee, also known as "Barista Maestros", will see their minimum pay increase from £9.64 to £10.29 per hour.
"Our team members are the heart of our business and as we continue to emerge stronger from the pandemic, this 5% pay increase is one way we are able to show our thanks to them," said Neil Lake, managing director of Costa Coffee UK & Ireland.
"Our teams have been through the most challenging year and a half in living memory and have shown incredible passion, resilience, and commitment as they continue to serve perfectly crafted cups of Costa coffee to consumers across the country."