I think a lot of people forget things about California. Like how big this state really is. I live in the SF Bay area, and after the Northridge Quake my mother called me in a panic, convinced I had been crushed by falling debris. It took several years (and a few visits) for her to realize that a lot of the Southern California disasters were a good 300 to 500 miles south of me.
It's not just length -- even though the state is fairly narrow, it still has distinct zones that vary fairly sharply. The "Central Valley" is intensely rural and just as politically and culturally insular as any so-called "flyover" state. The LJ readers in Bakersfield (as an example) can probably back me up on this.
Los Angeles, while certainly more urban and tolerant than some places, is neighbor to notoriously conservative/republican Orange county. LA itself has so many cultural transplants from both within and without US borders that it actually isn't so shocking that such a blatant example of homophobia could rear its head. Hell, Fremont is a town in the SF Bay area, supposedly as queer friendly as it gets as regions go, and is the location of a recent hate motivated murder of a trans-gendered teen.
While there are always laws designed to protect people from most forms of discrimination, the simple fact is it's very easy to circumvent such laws. Ban it in the workplace? Simply don't give someone a reason why they're being fired... California is an "at will" employment state. Ban it in housing? While it's gotten better, the rental market is still hot enough that property owners can cherry pick their tenants. Ban it at public restaurants? Make vague allusions to "policies" and point to a sign that states "We reserve the right to refuse service to anyone". Sort of recalls that seminal scene in "Giant" wherein Rock Hudson (oh, the screaming irony of it all!) gets his ass handed to him for his misplaced self rightiousness, and that very sign is tossed into his lap.
You see, he DOES have that right. It's their business. As a libertarian, I support that right. However, also as a libertarian, I can scoff at his complete lack of business sense, especially as the owner of an eating establishment. Bluntly, I'm amazed people open restaurants at all, considering how difficult they are to run, and how tight the margins are. Ever wonder WHY so many of them are family owned and operated? In many cases it's the only way they turn a profit at all.
Therefore I think the most appropriate thing we all could do is exactly what most of us ARE doing: Passing along the story and making damn sure that we take our money elsewhere.
He'll either take the hint and loosen up... or not, and go down in flames as his competitors welcome the diversity that, like it or not, California is all about.