Raising Wages, Dropping Tip Screens, and the Sugar Science of Leadership

Hey everyone, Litsa here.

If you’ve been following along with my last couple of posts, you know that running an ethical, independent coffee shop takes a lot of creative problem-solving. But the hardest, most rewarding, and completely humbling part of this journey hasn’t been the real estate or the plant milk margins. It’s been learning how to lead.

To be completely honest with you, people leadership did not come naturally to me. I used to be terrified of making mistakes and upsetting people, so moving past standard people-pleasing has been a massive personal hurdle. My background is in the 2010s tech boom, where I learned to appreciate the concept of "servant leadership." The philosophy is simple: smart people hire smart people, and then you get out of their way.

Here is how we put that into practice at Dear Diary, along with a few things we've tried (and a few things we're still figuring out).

Treating the Team Like Partners

Operationally, we do things a bit uniquely here. I want my staff to feel a genuine sense of ownership in the shop, but I also want to shield them from the terrifying financial risks that actually come with owning a business.

Because of that, we treat our staff like real financial partners. For every quarter that we hit our profit goal of 1% growth, every single employee gets a 1% raise. On top of that, we distribute 4.67% of our total profits right back to the baristas on an annual basis.

We also give our team a massive amount of sway over our direction. Whether it's during our quarterly meetings or in our chaotic group chats, the baristas pitch the ideas, management implements them, and we track the success together.

The Great 2026 Tip Screen Experiment

We are always looking for ways to make the customer experience better, which led us to a big decision this year. We decided to pursue a completely transparent, "what-you-see-is-what-you-pay" pricing model. We took the tip prompt off the credit card reader and stopped charging sales tax as a separate fee.

Our motivation was simple: we know the tip screen stresses people out, and we wanted to remove that friction.

But as transparent as it was, we are currently re-evaluating our options. Because tips no longer factored into income taxes under this model, we realized it actually lowered the amount of money going into our baristas' pockets by increasing the taxable portion of each sale. Even though everyone hates the tip screen, the traditional tip model is simply more financially advantageous for the team. It's a tricky balance, but our priority will always be making sure our baristas are taken care of.

"Extremely Austin" Vibes

Eater Austin once described Dear Diary as “Extremely Austin,” and that is the highest compliment we could ever receive. We are decidedly anti-corporate. If you look around our walls, they are covered in plants, stuffies, and random sculptures that our staff and regulars have brought in over the years. It’s a living space that changes organically.

I honestly can’t take credit for the vibes here. It’s the open mics, the drawing groups, and the beautiful, eccentric people who exist in this space that make it what it is.

Inside My Flavor Lab (and the Business Hustle)

While the team handles the atmosphere, I’ve carved out a little niche for myself in product development. I am a self-described lover of "sugar science," and I spend a lot of time developing our shelf-stable vegan and vegan gluten-free pastries and beverages—including the very spice blends and syrups our baristas sling every day.

In a hyper-competitive coffee city like Austin, every shop needs a revenue booster to survive. For some, it’s coffee roasting or a drive-thru window. For us, I've always hoped it would be food and beverage manufacturing.

For two years, I actually tried to launch an oat milk manufacturing branch of the business. Lattes make up over 90% of most coffee shop orders, and oat milk is crazy expensive. Plus, between all the local roasters and shops in Austin, each one tosses about 80 TetraPaks into the landfill every single week. I dreamed of making barista-quality oat milk affordable while eliminating that massive footprint.

So, what happened? Honestly, I just ran out of money. To make the leap to the next level, I had to start ordering entire pallets of ingredients, and the capital just wasn't there.

I’m still deeply interested in cracking the low-cost oat milk puzzle one day, but for now, I’ve pivoted my attention to our lower-cost, high-flavor spices and syrups. By keeping our manufacturing focused, we can keep innovating, keep our ecosystem local, and keep pouring love into every single cup.

Thanks for growing with us, learning with us, and being the best part of Dear Diary.

Warmly,

Litsa