In a large pot, heat over medium heat. Add diced bacon and cook until crispy, about 5-7 minutes. Remove bacon and let drain on paper towels.

Using the bacon drippings, add chopped onion and minced garlic. Sauté for 4-5 minutes until onion is translucent.

Add unsalted butter and let it melt. Stir in all-purpose flour and cook for 1-2 minutes until it turns golden.

Whisk in chicken broth gradually, ensuring there are no lumps. Bring to a simmer for 3-5 minutes.

Stir in whole milk and heavy cream, then bring back to a gentle simmer for another 3-4 minutes.

Add potato gnocchi and cook according to package instructions, about 3-5 minutes until they float.

Reduce heat and add shredded sharp cheddar cheese, stirring until melted and smooth.

Season with salt, pepper, and fresh thyme leaves. Stir to combine.

Add the crispy bacon back to the pot and mix well.

Serve hot, garnishing with chopped parsley and additional cheese if desired.