Prepare Dry Ingredients: Preheat the oven to 425°F (220°C). In a large bowl, whisk together flour, sugar, baking powder, salt, garlic powder, smoked paprika, and cayenne pepper.
Add Wet Ingredients: Pour the cooled, melted butter and cold buttermilk into the dry ingredients. Gently mix until just combined; avoid overmixing to keep the biscuits tender.
Fold in Cheddar and Chives: Add shredded cheddar and chives, folding them gently into the dough.
Shape and Bake: Using your hands or a spoon, drop the dough onto a baking sheet lined with parchment paper, forming 8–10 biscuits Place in the oven and bake for 12 to 15 minutes, or until the tops are golden brown and the texture is light and airy. Let cool slightly while you prepare the gravy.
Cook Bacon and Sausage: In a large skillet over medium heat, cook diced bacon until crispy. Add sausage, breaking it apart with a spatula, and cook until browned.
Add Vegetables: Stir in butter, shallots, mushrooms, and minced garlic. Cook for 4–5 minutes until mushrooms soften and shallots are translucent.
Season and Thicken: Add sage, smoked paprika, and tomato paste, stirring to coat. Sprinkle flour over the mixture and cook for 1–2 minutes, stirring constantly.
Add Liquids: Pour in chicken stock and milk, stirring well to combine. Let simmer for 5–7 minutes or until the gravy thickens to your desired consistency. Adjust seasoning if needed.
Serve: Split warm biscuits in half and generously spoon sausage gravy over each. Top with freshly chopped chives to enhance the dish's flavor and add a pop of vibrant color.