Gene and Terry are the types who celebrate a holiday to the point of overkill. They want to dress up the Brinkleys' table with autumn-themed decorations. They also plan to wear their "traditional" Pilgrim's hat and Indian chief's headdress.
The headdress is the cheap plastic kind that hangs almost to the floor. Gene is seated at the table and wearing it when the Brinkleys announce the turkey has failed and "gone to be with Jesus." He has to take it off.
Soon the group is ordering pizza at a nearby Sneaky's. Chris notes that they could've been having dinner with his relatives in Maryland, including a politically incorrect uncle:
REAGAN: Well, at least we don't have some vaguely racist guy in the background--
GENE [doing a fake war dance down the aisle in his headdress]: Hey-ya-ya-ya! Hey-ya-ya-ya-ya! Hey-ya-ya-ya!
GENE [stops in front of the other guests and raises one hand in greeting]: How!...'s about some pizza? [He laughs at his own lame joke.]
That way, we're not laughing with the stereotyper as if his actions are acceptable. We're laughing at him because he's a clueless idiot. Nothing signifies that the stereotypes are legitimate or funny or something we should tolerate.
For more on the subject, see Thanksgiving in This Is America, Charlie Brown and Pete Littlebear in Up All Night.
Below: The Thanksgiving meal at Sneaky's.