On the one hand, Denny’s is the antithesis of the Shire, because it’s a non-alcohol-serving American chain restaurant, and has absolutely nothing to do with English inn cuisine or with homemade goodies and homebrew.
OTOH, the dwarves would have absolutely no problem eating breakfast at Denny’s, because there are big portions. And Denny’s is a reasonable facsimile of a hometown diner, in most American towns these days.
But on the gripping hand, the idea of Radagast Red Velvet Pancake hushpuppy cakes, for the wizard of woodland animals? That seriously suggests drug use among the Denny’s meal developers, and yet it’s hysterically funny and oddly fitting. Because we’re Americans, and we come up with this kind of kooky stuff, which actually makes it seem authentic in a backhanded way. Ditto the Lonely Mountain cream cheese with lemon poppyseed seed-cake French toast snow, or smoke, or white lava. Or creamy Arkenstone center. Whatever the heck that’s supposed to be.
So yeah, I’m thinking that Tolkien would see the humor in this, rather than be offended. He might not want to eat any of this stuff, but he’d probably not be offended.
Here’s more extensive coverage. The Hobbit Hole Breakfast actually features a strange cheesy version of Toad-in-the-Hole, so there’s actually some English cuisine! And that seedycake of some nature, so there’s that. (English seed cake is usually caraway-flavored, though lemon rind does come into it.) Also, lots of eggs and bacon and sausage, and pot roast. So it’s not too hateful, and would definitely fill your belly.
Where do the dwarves get turkey, a New World fowl?
Same place they get tobacco and potatoes, both New World plants. Toby Longbottom’s journey brought stuff back. (No, pipeweed’s not pot. Read the foreword to LoTR, where Tolkien tells you all about tobacco in Middle Earth.)