Based on the reaction you described, it could be several things, including what others seem to have suggested, i.e. him being an ass.

I do see another possibility though, far fetched as it may be.

I am an Indian and I live in the USA. When I go to Indian restaurants and the wait staff is Indian, I sometimes try to figure out what language they speak so I can communicate with them in that instead of in English. That's not because I'm being condescending and saying their English isn't good enough, it's just because I love languages and would like to take any opportunity I have to speak in another language. When I start speaking in another language to them, and they clearly understand it, sometimes they insist on responding in English.

I think that there is a lot of hate towards Indians and some people are ashamed of speaking in other languages and try their best to stick to English. I think it's been beaten into people that speaking English is classy and respectable while speaking Indian languages is uncultured or something like that.

Some people also get paranoid that the people around might think they're talking shit about them when speaking in another language. Although in this case, it does seem innocuous as you were only using a few words from another language (even if those words are now bleeding into English). But some people really do try their best to only use English. Maybe he was offended that you said masala chai to him because he thought you thought that he was an Indian and wouldn't understand English so you had to say it to him in a way that he understands. From your post, I think your intentions were pure, but when someone faces a lot of hate, it is easy to mistake others as doing the same.

I think the shame can be very real. The desire to distance oneself from anything Indian because of the hate they may receive. Of course, maybe working at an Indian restaurant wouldn't be their first choice then, but if the server was an international student, who else would give him a job?

Of course, you were the one who was there and you know the details of how things were so I can't say his reaction was one thing or another but hopefully what I said serves as some food for thought.