A bystander in the restaurant who saw the exchange said he had his "faith in humanity restored" in a post on Facebook.
"I walked into Tim Hortons in Ontario and a little boy (maybe four or five) saw this older gentleman and just stopped and looked at him in awe, 'Omg its Santa!'," the bystander, Mark Hurson, wrote.
Hurson continued: "The older gent looked down and smiled and asked him if he had sent his letter into him yet.
"The boy said 'no' and he would be doing it tonight.
"The older man said you better be nice to your mum and sister because I'm watching. He then said goodbye and that he was going back to the North Pole to finish the toys with the elves.
"Everyone in the restaurant was a bit teary eyed (including me!). There are some great people left in the world."
It wasn't only Hurson that was touched by the exchange.
After posting the photo on Facebook, Hurson said he received an "incredible" amount of Facebook messages from strangers.
"People have been letting me know they read the story and what the story meant to them - my inbox is officially jammed. Thank you," he wrote.
Hurson shared some of the messages he had received.
One read: "Absolutely love this story, it brought back so many great memories for me of my childhood.
"I still believe after 47 years, that Santa is real. In the midst of all the anger as of late around the world, this is a beautiful reprieve from it. Thank you."
Another person wrote: "Just saw this on my news feed from a friend. With everything going on right now in our crazy world, this was wonderful to read before I hit the sack."
The post, which was shared on 16 November, has now had nearly 19,000 shares.
Hurson posted an update on the thread the next day, after he had the pleasure of meeting the "now famous" Santa.
Hurson wrote: "Such a lovely man with a heart of gold. Fergus Ontario you are very lucky to have this guy as one of your community.
"So pleased this story was enjoyed by so many people around the world. Really appreciate all the people who shared it and messaged me to let me know how much it touched them. #santarocks."