After yet another attack on the Krusty Sheldon by Krabs, SpongeBob asks Mr. Plankton why they hate each other so much. Mr. Plankton tells his side of the story, in a series of flashbacks:
Mr. Plankton and Krabs were best friends from birth and did everything together. Both were outcasts, Plankton being viewed as a nerd for his intelligence, and Krabs being extremely poor, and victims of cold-hearted ridicule and social prejudice by a particular circle apparently led by Billy. One day, Krabs finds a penny at the carnival, his first exposure to money, which he spends on a balloon for Plankton. Later, they get enough money to buy a burger from Stinky's Burgers, which, despite having horrible food and literally being located in a dump, is very popular among the local children including Billy and his gang due to being the only place in town to get a burger. Mr. Stinky, apparently just as shallow and mean as Billy and his group, refuses to serve them, saying that freaks like them are bad for business, and tells them to "wait" at the back of the building. There, they witness Stinky retiring for the day, having made millions from the stand. Plankton and Krabs decide to go into the burger business themselves and create their own burger, but no one wants to try it. When Stinky's is closed by the local health department, the two open "Plabs Burgers" on his former site, which the children are now forced to eat at, despite it being even worse than Stinky's.
Krabs says that they are now ruling the stomachs of the children, and soon will be ruling their money. Plankton argues that it should be about satisfying the customers, rather than profit. Soon, they get into an argument, and Plankton is ejected into a dump pile and tells Krabs that he will one day regret this.
Krabs comes in and disagrees with Mr. Plankton' story and tells SpongeBob his own version. His story is the same as Mr. Plankton', except that their roles during the fight at the end are reversed, with Mr. Plankton wanting to rule the children through power.
Krabs and Mr. Plankton begin arguing about the story until Karen arrives and tells the real story: as she had been a security camera installed by Plankton at the time and recorded everything.
The restaurant initially has no customers, and Old Man Jenkins is the first to try one of their burgers. Upon taking a bite, he smiles, falls to the ground, and a newspaper appears saying he knocked out by the taste of the burger. Plankton and Krabs become angry and accuse each other of tainting the patty. They begin fighting over the recipe, eventually tearing it in two, with Krabs getting the bottom half, which says "...and a pinch of chum." Their friendship is over Krabs storms out to pursue his own career in food. However, during the struggle, a shelf was knocked down, dumping various ingredients into the patty batter, creating the Patty recipe, which Plankton is left with. The two go their separate ways, each trying to open their own establishment. Plankton' "Sheldon Patty" is great, while Krabs's Krabby Chum is horrible.
After hearing the story, Krabs and Mr. Plankton begin to make up and apologize, until Krabs takes the formula from SpongeBob. Mr. Plankton and SpongeBob start chasing Krabs and Karen in circles as the episode ends.