Though, I am, again not a lawyer, but I am 99% sure you can't go use the Waffle House logo to sell anything, let alone waffles. I only say that because no one is using, say, the Coca-Cola brand to sell shoes, and if they did, we all know Coca-Cola would prevent that. That goes for any trademark in the US. So perhaps trademark law is different here?
Also, Waffle House are ubiquitous as a brand in the United States - certainly not as well known as Coca-Cola or Sony, but I have no doubt they'd be able to prove national awareness in any demographic.
In this particular case if you look at the C&D, it is for the trademark usage. It's likely that this person could have simply removed the trademark from the page and it would have been fine.
edit: I think the key in other industries would be proof of brand dilution - that is, if you start using the Nike logo to sell waffles, Nike would send a C&D if not a team of lawyers because you are diluting the trademark. So I guess you're technically right, although functionally, brand dilution is easily provable.