Meet Denny's newest breakfast wars weapon

Hadley Malcolm

Denny's hopes customers will flip for its new flapjacks, becoming the latest chain to embrace customer demand for better-tasting food made fresh with real ingredients.

Hoping to stack the deck in its favor when it comes to the breakfast wars, Denny's unveiled a new pancake recipe Monday that replaces the just-add-water powdered mix routine with fresh buttermilk and eggs. The new hotcakes are 50% fluffier, executives say.

Denny's officials hope the change will give them an edge not only against traditional diner rivals like IHOP, but against fast-food chains like McDonald's, which has been heavily touting its new all-day breakfast offerings. Breakfast accounts for 24% of Denny's average daily sales, second only to lunch at 35%.

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For chains like Denny's, better pancakes can, over the long run, become a matter of survival. Consumers, with expectations raised by TV cooking shows and awash in warnings about the need to add higher-quality food to their diets, are putting pressure on chains like Denny's to improve.

"If they don’t (change), consumers have way too many choices today," says Mark Cotter, CEO of consulting firm The Food Group. "If these companies do not modify what they put in their products ... these brands will slowly die."

Denny's, which became known for its Grand Slam breakfast, isn't alone in trying to add fresher ingredients:

• McDonald's. The giant among fast-food chains  is testing fresh hamburger patties instead of frozen ones in some locations in Dallas. Last year, it siwtched from using margarine to butter on the grill.

• Carl's Jr./Hardees. Carl's Jr. advertising now highlights how it makes biscuits fresh at its stores using real buttermilk.

• Panera Bread. The chain is among those getting rid of artificial ingredients in some or all products. And it's not easy: It takes Panera roughly a year to reformulate a product with natural ingredients, though the company says in some cases the changes are helping it save money.

Denny's spent three years tweaking its pancake recipe to include fresh buttermilk and eggs instead of relying on a dry mix that only required adding water.

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Denny's new pancakes, right, are noticeably fluffier than the old version, left.

It took Denny's three years to redo its pancakes, and the new ingredients cost $5 million more for franchisees than the old recipe.

Part of Denny's push stemmed from hearing from customers that they didn't come to the diners because they craved the pancakes, a problem given the restaurant industry's current fixation on the morning meal.

"Good isn't good enough anymore for the average American," says Sharon Lykins, senior director of product innovation for Denny's, which starts rolling out the new pancakes Tuesday in its more than 1,700 U.S. restaurants. "The customers liked (the pancakes) fine. But there wasn't anything special about them that said, 'I've gotta go to Denny's to have pancakes.'"

Many of the ingredient changes companies are making are too new to determine the difference they're making to the bottom line. But there are some clear signs that customers like what they're eating.

Panera Bread was one of the earliest major adopters of the natural food movement. The bakery and cafe chain announced in June of 2014 that it planned to get rid of artificial ingredients from its entire menu by the end of this year. The commitment is complete for about 90% of ingredients so far.

Sales at stores open at least a year in the most recent quarter ended March 29 were the best they've been in four years, increasing 4.7% from the year-ago quarter, leading Panera to increase its guidance for the year. In the last two years, the company's stock has risen more than 36%.

"When we have guests taste these (new) products, they think they taste just as good or better," says Sara Burnett, Panera's director of wellness and food policy. "We don’t roll out a product if they don’t meet that target."