The question really is when did restaurants begin using booths?
It wasn’t until mid 20th century. Even taverns used tables or picnic bench seating. I don’t know when the very first set of booths appeared, but two trends overlapped at the beginning of the century: the lunch wagon, which set up outside of factories to serve workers at lunchtime, and the railroad dining car. The first lunch wagons were more like the food truck of today with no interior seating, but evolved into fancier permanent locations. The dining car typically had two rows of tables.
At some point, maybe even before WWI, some dining cars replaced a line of tables with booths. The idea caught on. Although the romantic idea is that diners were repurposed old dining cars most were specially made for the purpose. Here’s one from the 1920s.
Booths definitely started in less expensive restaurants yet you see them today in most restaurants including high end ones. Apparently most people love booths.
Comfort: Booths are typically more comfortable than chairs, with padded seats and backrests. This is especially important for people who are eating a large meal or who have been on their feet all day.
Privacy: Booths provide a sense of privacy that tables do not. This is important for couples or groups who want to have a conversation without being overheard by other diners.
Coziness: Booths can feel more cozy and intimate than tables, which can be a plus for people who are on a date or who want to have a more relaxed dining experience.
Comfort: Booths can seat more people than tables, which can be helpful for restaurants that are expecting large groups.
Capacity: Booths are typically more comfortable than chairs, with padded seats and backrests. This is especially important for people who are eating a large meal or who have been on their feet all day.
Style: Booths can add a touch of style and personality to a restaurant. With a variety of upholstery and design options available, there is sure to be a booth that will match the style of any restaurant.