Depends on the restaurant and the labour available and the quantities needed.
If you have staff standing around for an hour each day waiting for things to happen then you buy the whole bulbs and let the staff peel.
If you need greater amounts faster you buy pre-peeled.
Both would then have you chop the peeled garlic in a food processor with a touch of oil to help it get nice and fine.
Lastly you'd buy it in pre-chopped.
It's all about cost.
One restaurant I worked at we had this 70 year old Italian guy called "Papa" that had been with the organization for decades. His job was to peel garlic, onions, carrots then help out with dishes. He was old and slow but apart of the "family" and after putting in his time doing decades of hard excellent work this was sorta his retirement package. It gave him a reason to get up in the morning and put food on his table. We could have bought pre-peeled and made out a little cheaper but that wasn't the point. You don't see that sort of employer/employee respect anymore and it's really sad.