Step 1
Preheat oven to 350 degrees F (175 degrees C).
Step 2
Place bacon in a large skillet and cook over medium-high heat turning occasionally until evenly browned about 10 minutes. Transfer crisped bacon with a slotted spoon to a Dutch oven. Retain bacon drippings in the skillet.
Step 3
Generously season short ribs with salt and pepper.
Step 4
Heat bacon drippings in the same skillet over high heat. Cook short ribs in hot bacon fat until browned and caramelized on all sides 3 to 5 minutes per side. Transfer ribs to the Dutch oven reserving drippings in the skillet. Add thyme and bay leaf to the ribs mixture.
Step 5
Reduce heat under the same skillet to medium. Cook and stir onion in the skillet until soft and golden 5 to 10 minutes. Add garlic; cook and stir until fragrant about 30 seconds.
Step 6
Whisk flour into onion mixture and stir until the mixture becomes paste-like and light golden brown 1 to 3 minutes.
Step 7
Pour sherry into onion mixture; cook until thick and hot about 2 minutes. Pour onion-sherry mixture into Dutch oven; add beef broth and salt to taste. Bring ribs mixture to a simmer and cover the Dutch oven with a lid.
Step 8
Transfer Dutch oven to the preheated oven and cook until short ribs are fork tender about 2 hours. Remove ribs to a serving dish reserving sauce in the pot.
Step 9
Set Dutch oven high heat and boil sauce until reduced and slightly thickened about 10 minutes. Spoon reduced sauce over ribs.