No, you wouldn't have to eat at GF. Santa was outside in the corridor of the hotel not in the restaurant.
GF is expensive but totally worth it in my opinion. Great interaction with the characters. My nephew, 3yo, cried when a little boy took a pot from him during the pots and pans banging thing and Goofy came over to our table again and hugged him and played just with him.
Also, my son, 14, had a coat on that had some fake fur on the hood and Chip & Dale had great fun with him the entire evening thinkiing it was chipmunk fur.
We had lots of personal attention from the characters and the food was very good in my opinion, but I am not a food snob. I would say it was very good buffet food. We went for dinner and thoroughly enjoyed it. Santa was an unexpected bonus for us.