Services manager Graham Cameron said their actions were to make a point to Mr Key, who needed to mind his language.
"We are a community where gay is a term of abuse at school or in the community. People get called gay as a way of abuse and then there's the more serious side as it imposes on young peoples' senses of self worth. Most of us have friends or family who are gay," he said.
Mr Cameron disagreed with suggestions the Gay Red Shirt Day could be perceived as political correctness gone overboard.
"If he said that's a ******-black T-shirt, we would all have been outraged.
"Just because a term can be used doesn't mean it should be used.
"Gays are a group of people. To use their name as a jocular jest is not all right, as community leaders and as a national leader," he said.
Their cause has already attracted a lot of positive feedback, Mr Cameron said.
Gay Te Puke Hotel food and beverage manager Kevin Haraki-Beckett, said he understood Mr Key to have a weird sense of humour and he generally didn't worry about things like that.
"It's a bit of a tough one ... There are some people that get quite upset and if it was more than that I probably would, but I don't think it's worth the energy of getting all upset. We're all human and we all put our feet in our mouths sometimes," he said.
Sir Ian said he was touring schools in the UK where children used the word gay to attack others. He discouraged children from the careless use of "gay" which might make their gay friends (and teachers) feel less about themselves. "So even as he supports the proposal to introduce same-gender marriages in New Zealand, I do hope John Key listens to his critics and appreciates their concern. Careless talk damages lives," he said.
Mr Key said he meant "weird" when he used the word "gay" in the interview. He had picked up the term from his children and had no intention of sounding homophobic. He has since said he was "mucking around".
- with Joseph Aldridge and APNZ
