Grease a 13x9-inch baking pan with unsalted butter and set it aside. Line a plate with paper towels.

In a large sauté pan set over medium heat, cook the breakfast sausage, breaking it apart into pieces. Using a slotted spoon, transfer the sausage to the paper towel-lined plate.

Add 2 tablespoons of unsalted butter to the pan. Once the butter has melted, add the onions and peppers and cook the vegetables, stirring occasionally, until the onions are translucent. Transfer the mixture to a large bowl then add the sausage to the bowl and stir to combine.

In a separate large bowl, whisk together the eggs and milk with 1/2 teaspoon salt and 1/4 teaspoon black pepper then stir in the cheddar cheese.

Arrange the bread cubes in an even layer in the greased baking dish then add the sausage mixture on top, spreading it across the bread. Pour the egg mixture on top of the sausage mixture then cover the dish securely with plastic wrap and refrigerate it overnight.

When ready to serve, preheat the oven to 350°F. Remove the casserole from the fridge and discard the plastic wrap. Let the casserole sit at room temperature for 30 minutes then place it on a baking sheet and bake it for 35 to 45 minutes until the eggs are fully cooked. Slice and serve.