The new couple browsed the main drag of the seaside town on June 16, stopping for afternoon coffee at the Carmel Coffeehouse & Roasting Company.
“Blake ordered two cappuccinos,” an onlooker tells PEOPLE. “One with whipped cream, and one without. But when she learned that the whipped cream was homemade, she added it to the second drink.”
“She was very sweet,” the source continues, adding that while Lively ordered, DiCaprio, waited outside with his signature baseball cap tucked low. The duo then took off for a stroll.
DiCaprio, 36, and Lively, 23, were first spotted together in November, shortly after the actress split from longtime beau Penn Badgley. The meeting was grouped, and at the time seemed like nothing more than a friendly outing.
Just a few months later, they seemed flirty at Jeremy Renner’s birthday party.
But it wasn’t until May – right after DiCaprio split from Bar Refaeli – that he and Lively started getting cozy as the Cannes Film Festival ended. Since then, they have most notably traveled in Italy together.