When I lived in the UK, you would often see a dog or two in pubs or outside areas of restaurants. Even occasionally in the grocery store (they were smaller ones, though, and always in a cart). There was never any commotion over them.
In Norway, dogs aren't even allowed in the outdoor area of restaurants unless the waiters are willing to look the other way. The same goes for pharmacies and grocery stores (some grocery stores look the other way if you are carrying the dog). The explanation is always that the Norwegian food authority (which also has jurisdiction over pets, for some odd reason) bans them because people might have allergies.
I think Norway is an example of taking things way too far. Why not allow the shop owners to decide for themselves whether they are more interested in catering to dog owners or people who might be allergic? People with allergies have to worry no matter what, because a service dog is still allowed in, so they have no guarantee of not encountering a dog, and if they have a severe allergy, the dog hair on my clothes could be enough to set off an allergy attack (if it isn't, my dog probably won't cause the person any problems unless she jumps on them, which I always do my best to prevent).
In the end, people need to stop abusing the system, but the system needs to be relaxed to allow more flexibility.