Service dogs wear a type of "vest-collar" to identify them. We know a man whose training a puppy to be one and this dog wears it at all times when they're out and about. His dog is young but knows the commands very well and will lie down under his chair!
It's these types of dogs that are generally allowed in establishments and not other dogs. Not knowing the details of this occurance that the OP talks about it's hard to make an opinion otherwise.
BUT if these were folks off the street asking to have their pets accompany them into a restaurant is going over-board. It's unappetising plus not healthy to have a dog's face on the table!!
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