Could they have gotten around this by actually serving Eggo waffles? Would that have then fallen under nominative fair use?

I doubt it, no. I couldn’t go buy Taco Bell sauce at the store, serve it at my restaurant, and call my restaurant Taco Bell.

They could probably mention it on their menu.

I'm guessing (NAL) that would actually make it worse. Trademark violation revolves around brand confusion. If you actually serve their product you are making that _much_ more likely (in my uninformed opinion anyway).

Otherwise it's a standalone argument about a stupid pun applied to food in general.