I used to work at a Chinese restaurant an the number of people who came in there blithely asking me if we "really" cooked and served cats was astounding.
I got tired of answering the question so often that towards the end I gave up and my standard response was, "No, we only cook and serve idiots who go around saying we cook cats."
I think the very low percentage of lost business was worth it. And this only because my boss told me that this kind of thing did not meet the criteria wherein I was allowed to roundhouse kick patrons in the teeth. If you're going to be a dumbass, at least try to be original.