If your 5 year old really noticed the tyranny and mentions it, you must respond. I live and work in a large city where such people are legion. Children do notice and need the guidance of wise parents and adults. May I suggest responding that the man (?) who was the Burger King is displeasing to Our Lady because he wears make up and clothes meant for ladies, also, that he is showing himself off, not as Jesus or any of the Saints do. He is to be pitied because he is unhappy not knowing God. People like him need our prayers. Then pray a Hail Mary for him. After this, involve your child in an activity and do not mention the topic again.
As children become older, fill in only as much information as necessary. Always, always resort to prayer. Pray for your children to remain pure, and teach them to pray for themselves for purity. Make certain they are consecrated to Our Lady, and are wearing her Miraculous Medal, or St. Benedict, or St. Michael as well as a brown scapular.
Last weekend my city held its annual pervert parade and party, so I made sure I was out of town.