I was in Penang recently and of course Scruffy was with me. Here are our experience of dog friendly placed.
1) End Of The World Seafood (Teluk Bahang) The owner is really nice and he even provided a bowl of water for Scruffy and allowed him to sit on the chair.
2) Beach Cafe(Or something like that. It is the open air hawker place by the sea) Along Jalan Sultan Ahmad Shah. The servers there were really nice and they even offered some treat to Scruffy.
3) Fatty Low Chicken Rice Shop at Fettes Park. Scruffy was allowed to sit on the chair there.
4) Lorong Selamat Hawker Place.
5) Fish Head Curry Place at Gurney Drive.
Oh but whatever you do, dont bring your furkids to Craven Cafe. I was there cause they have free wifi. But the people there are so unfriendly towards dogs. Even though we were just sitting outside at the open air area they refuse to allow dogs there at all.