Start by patting the beef dry and seasoning it. Heat olive oil in a heavy pot and sear the meat until browned on all sides. This locks in juices and builds a deep flavor base for the stew.
Add chopped bacon to the pot and fry until crisp. Toss in onions, carrots, and garlic, cooking until softened and fragrant. This forms a sweet, savory layer for the sauce.
Stir in tomato paste and flour, coating the ingredients. Slowly pour in red wine, scraping the bottom to lift flavorful bits. Simmer for a few minutes to reduce slightly and meld flavors.
Return the seared beef to the pot and pour in beef stock. Add thyme and bay leaf. Bring to a simmer, then cover and cook gently on low heat for 2 hours until meat is tender and falling apart.
In the last 30 minutes, stir in mushrooms and pearl onions. They cook perfectly without becoming mushy and absorb the rich gravy beautifully.
Taste and adjust salt and pepper. Remove thyme sprigs and bay leaf. The stew should be thick, rich, and flavorful, ready to enjoy straight from the pot.