Personally I'd ignore it for now. Bringing a copyright action against someone costs THOUSANDS of dollars. Most photographers aren't going to have the money or be willing to spend months or years in court for a cosplay photo at a cafe. The potential damages are so small... potentially MORE than $500... but not THAT MUCH more.

Send them a letter stating that you've removed all promotional material for the event, and that you consider the matter closed. Offer them a free coffee and round of monopoly the next time they're in. Ask if they'd be interested in being hired to photograph future events there. Do NOT admit they owned that photo or that your use was wrong or illegal. Do not apologize. If something DOES come of it, you do not want to have admitted to any facts. The burden should be on THEM to prove each element - that he owned the photo, that you used the photo without license, and what the damages for that use are. Don't do any of that for them.

To be clear, you ARE in the wrong here. Don't do this in the future. I'm a professional photographer and am annoyed and incensed on his behalf. But I also don't have the time to chase down coffee shop owners for posting a photo... and I'd wager my photos probably have more commercial value than his cosplay crap.