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In a large pot, cook the diced bacon over medium heat until crispy. Remove bacon with a slotted spoon and set aside, leaving about 1 tablespoon of bacon fat in the pot.
Add butter to the pot. Once melted, sauté onions until soft and translucent, about 3–4 minutes. Add garlic and cook for another minute.
Pour in the chicken broth and bring to a simmer. Stir in the heavy cream and thyme.
Add the gnocchi and cook according to package directions, usually 2–3 minutes, until they float to the surface.
Reduce the heat to low and stir in the shredded cheddar cheese until smooth and creamy. Season with salt and pepper.
Return the bacon to the soup and stir.
Ladle into bowls, garnish with chopped parsley and extra cheese, and serve warm.