I would place assorted accent pillows along the bench (when sitting people can use them as back cushions) and place a large frame print on the wall above the bench.

The simplest thing to do would be to just get an array of throw pillows to use as backrests, then add art on the wall:

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The other option would be to do an upholstered back and bolt it to the wall: This one uses leather straps:

I would probably do the wall attached thin upholstered piece that Sabrina shows. This can be hung on a cleat I did a headboard this way.

I would not put any shelves, they would have to be high so people didn't bump them when getting in and out of the banquet.

This would probably also work better with an oval or rectangular table, because two people seated at the banquet at the round table would have their places set at an angle to how they are seated.

Yes - I'm leaning toward the wall attached but having a heck of a time finding any fabric that I love. Also thought about strapping up some lumbar pillows in a similar fashion, but then I could remove and wash them. I have a puppy that likes to eat pillows! And young kids. "This is why we can't have nice things". :-/ . For the table, I'm thinking rectangle with rounded edges - pretty classic mid mod shape. I'd like to add some pattern and color... just not confident if it should be in wallpaper, or the fabric, or even maybe in the straps that hold up the backrest.

For a clean MCM look I'd make a solid back cushion that is the same fabric as the seat cushion and attach it to the wall so that it can be taken on and off for washing. One large picture above, not a gallery. Your built-in lighting will look great on a large piece of art.

Your bench doesn't seem to be very deep (perhaps how the picture was taken) so the back cannot be too deep. Here are 2 ideas, one of them would look better if you reupholster the seat cushion to match the back one. The one from Etsy is in leather.

What about a cushion mounted to the wall in the same color as the seat, but with straps the color of your teal sofa? Maybe you could find a really nice wallpaper print with those colors, and frame it like art above.

I would upholster the wall together with the banquette.

https://www.amazon.com/dp/B0CK26WTH7/ref=twister_B0CK1CXFDF

Honestly I don't know why more people don't use contract grade vinyl for this sort of thing. I have used Knoll Textiles and Naugahyde for a number of pieces including my headboard. It's used all the time on restaurant banquets and most of the "leather" in cars with leather seats is vinyl. Only the "seating surfaces" are leather, if you read the small print.

https://www.maharam.com/knoll-textiles/products/upholstery/search?pattern%5B%5D=1&subcategories%5B%5D=8

tan grass cloth wallpaper would work there.

Thanks for all of the ideas! This is where I'm at so far...

Don't mind the random dining table stacked on top of the other dining table.

With young children I’d avoid loose cushions and suggest a grey faux leather padded board on the wall (with rust ties) and recover your padded cushion also so it’s easy to wipe down. Your dining set and cabinetry will feel more incorporated color wise and have a nice MCM look.

https://roomfortuesday.com/banquette-or-headboard-diy-back-cushion/

I think it’s important to consider all the components, including art and how they relate to each other…so have a plan first.