Hand shuffled or ASM?
If it is a hand shuffled game, this procedure is costing that casino a lot of money over time by forcing the dealer to shuffle perhaps as much as 20% more often in a heads up game. If they are using an ASM, cost is insignificant in comparision.
You did not mention how deep they also cut the shoe. If they for instance only cut 1 deck, then with three players at the table, the initial 10 cards plus the additional burn cards between hands might equal another half deck. In a one on one game it would equal another deck or so. So they have reduced pen for less players and increased it when there are more players.
If they cut 1.5 decks or more, then pen is so bad that you should avoid the game unless there are other factors.
1 deck cut, 208 cards in play, less 10 card burn, is 198 cards. At 5.5 cards per round heads up plus 1 burn card you get about 30 rounds, so about 1 3/4 decks never play. Any more than that you are looking a two or more decks either cut or burned.
Why they do this: Perhaps a form of paranoia, a common disease that effects many casinos.
ihate17