Why are there still racist people in our society?

I am an Asian Canadian, and I experienced something quite annoyingly frustrating today. I went to an Iranian restaurant with my Mother and near the entrance, there sat what looked to be at the time a Caucasian male. I could not identify his racial identity promptly because of his hood which he chose to wear indoor ,nor did I attempt to at first. In fact I did not even notice him until his commendation towards us which through me off guard and forced me to reluctantly judge his character based on his physical appearance. I remember his precise sentence as; "This is not a Chinese restaurant." As shocked as I was, I replied with a smile; " Ya I know, Iranian food is beautiful, that is why we are here." He turned around and murmured; "You should eat your own food." At that point I chose to walk away and continue with my order, however my Mother was furious and wanted to continue the disgraceful conversation. Nonetheless, I stopped her by telling her in Chinese that it is not worth her time. Did I do the right thing by walking away, or do you think it was cowardice to not have a verbal quarrel with him? Lastly, why are there still so many racist people even in big cities? Don't they realize that racism is stupidity? I m not hating on any race by saying this, but through my entire experience in Canada, it was always the Caucasians that act racist towards me, why is that?