As convincing as your lunch anecdote is, I'm not sure you're can hand waive away the problem so easily.
From https://en.m.wikipedia.org/wiki/Racism_in_Israel
A March 2010 poll by Tel Aviv University found that 49.5% of Israeli Jewish high school students believe Israeli Arabs should not be entitled to the same rights as Jews in Israel
An October 2010 poll by the Dahaf polling agency found that 36% of Israeli Jews favor eliminating voting rights for non-Jews
A 2012 poll revealed widespread support among Israeli Jews for discrimination against Israeli Arabs, including 33% of respondents believing Israeli Arabs should be denied the right to vote, 42% objecting to their children going to the same schools as Arabs, and 49% "[wanting] the state to treat Jews better than Arabs"
And on and on and on...