Is this funny?
How can you even ask such a question? It is fuckin’ hilarious!

Isn’t this cultural insensitive?
Yes, the cultural insensitivity here is off the charts.

If it’s so culturally insensitive then why is it okay to laugh?
Because of the inherent absurdity of it all. A great many restaurants in America serving ethnic food—or some facsimile of it—are culturally insensitive simply by existing. (Taco Bell, anyone? “Live Mas” and “Make a Run for the Border”!) Something like this exposes how silly all of us really are, and should also call into question the recent rise in popularity of righteous indignation.

I like being righteously indignant; it makes me feel important. Instead of laughing, shouldn’t I fly off the handle and punish the world for this mural’s existence?
If shaking your head while laughing is not enough then by all means… knock yourself out. Just don’t expect reasonable people to pay you much mind.