Fuel-rich operation is common in hydrocarbon engines and improves specific impulse, although the mechanism by which it does so is debated.
According to Sutton & Biblarz' Rocket Propulsion Elements:
Rocket propulsion systems usually do not operate with the proportion of their oxidizer and fuel in the stoichiometric mixture ratio. Instead, they usually operate fuel rich because this allows lightweight molecules such as hydrogen to remain unreacted; this reduces the average molecular mass of the reaction products, which in turn increases the specific impulse.
Henry Spencer, however, says:
In a chemical rocket, where the reaction mass and
energy source are one and the same, trying to lower the molecular weight
by adding an excess of one propellant also reduces the flame temperature,
and if you actually do the math, it's always a net loss.
So why do they run fuel-rich? Well, partly there are some simplifying
assumptions in that math which aren't strictly correct. More important,
though, is that the textbooks look at the wrong part of the equation.
They skip over the nozzle efficiency, which is not independent of the
gas composition. In particular, the subexpression (gamma-1)/gamma, [(k-1)/k in Sutton; the "ratio of specific heats"] which
appears as an exponent in the nozzle efficiency, is a strong function of
gas composition, and to a first approximation, it's inversely proportional
to the number of atoms per molecule. So an excess of fuel, meaning that
some of the fuel ends up as CO or H2 rather than CO2 and H2O, can make a
big difference to nozzle efficiency, and that can more than make up for
the reduced energy release.
Hydrogen-oxygen engines do the same; here's Spencer again:
Yes, the SSMEs run
fuel-rich -- all hydrogen engines are run very fuel-rich, because that
improves performance considerably. Having a fair bit of unreacted
hydrogen in the exhaust turns out to be good for performance in several
ways, and hydrogen is so light that the mass penalty for this is small.
Ideally, hydrogen engines would run at about 4:1, with half the hydrogen
unburned; in practice, because hydrogen is so bulky, considerations of
tank mass usually force the engine people to compromise on about 6:1.