Eugene H. Krabs is about to open his new restaurant, the Krusty Krab 2, to boost his business venture's popularity. At the opening ceremony, SpongeBob does not receive the title of general manager, which is instead given to Squidward, severely depressing the sponge. Plankton, distraught that his archrival is getting all the attention, uses the dreaded Plan Z to steal the Krabby Patty formula. He arrives at King Neptune's castle to steal Neptune's crown as part of Plan Z and is successful. Plankton feeds false information to Neptune, stating Eugene H. Krabs stole the crown. Infuriated, Neptune heads for the Krusty Krab 2. Later that evening, SpongeBob has an ice-cream eating contest with Patrick to brood over his loss, and, after obtaining a hang-over, heads to Krabs to talk things out. When he arrives, he sees Neptune attacking Krabs and demanding him to return his crown. SpongeBob promises Neptune he will travel to Shell City (where the crown was seen last) and retrieve the crown in six days; in the meantime Neptune freezes Krabs as he is the only suspect. Should the crown not return in six days's time, Krabs will fry. SpongeBob and Patrick take the Patty-Wagon, and with a resounding KER-PATTY!, smash through the wall of the restaurant and head off on their adventure.
Carrying out his Plan Z, Plankton steals the secret formula of the Krabby Patty while Mr. Krabs remains frozen. Plankton's restaurant finally gets customers when the Patty is distributed, though this is only a portion of Plan Z. Meanwhile, SpongeBob and Patrick lose their car at a gas station, and they go to great lengths to retrieve it upon finding it at a bar for tough fish. They continue their journey, unaware of the trouble that is brewing at Bikini Bottom: Plankton has sent a hitman named Dennis to go after the two.
Squidward uncovers the truth about Plankton and Neptune's crown theft and attempts to alert the authorities. However, Plankton uses mind-controlling buckets, disguised as souvenirs, to control the residents of Bikini Bottom, including Squidward, and renames the city Planktopolis. Back on the road, SpongeBob and Patrick drive into a place littered with skulls and bones, but, due to their ignorance, buy ice cream. The whole setting turns out to be a frogfish's lure, but SpongeBob and Patrick escape when the frog fish is eaten by a giant eel from a trench. SpongeBob and Patrick are about to admit defeat from the danger of the trench when Neptune's daughter, Mindy, shows up and tells them what Plankton has done. Neptune, however, is more concerned about his baldness (the prime reason why he wants his crown back) than the safety of the underwater world, and it is entirely up to SpongeBob and Patrick to save the day. When the two still refuse to cooperate, Mindy falsifies things by attaching strands of seaweeds to their lips, lying to them that they have grown mustaches and have become men. The gullible SpongeBob and Patrick are motivated and dances their way across the monster-infested trench, while Mindy leaves. The two then come across Dennis, who, after ripping off their false mustaches and spitting the truth at them, tries to kill them. Unexpectedly, a giant boot belonging to a human squashes Dennis, and the human, known to marine life as "the Cyclops", (due to the old wet suit he wears) grabs SpongeBob and Patrick and takes them away to his gift store, which is in fact Shell City. The Cyclops owns the shop and is selling Neptune's crown for seven dollars.
When they arrive, SpongeBob and Patrick encounter a lethal drying-out process which nearly kills them. However, their tears short circuit the heat lamp, which releases smoke and activates the emergency sprinkler system, which revives them as well as the other hundreds of dried-out sea creatures (their bodies were being sold as souvenirs). While the sea creatures attack the Cyclops, SpongeBob and Patrick take the crown outside to the beach. David Hasselhoff offers the two a ride to Bikini Bottom, which they gladly accept. Dennis makes one final attempt to eliminate the two, but is struck by a catamaran. Back at the Krusty Krab 2, Neptune arrives to execute Krabs, while Plankton eagerly watches. In the nick of time SpongeBob and Patrick return with the crown, saves Krabs, and then confronts Plankton. In turn Plankton activates the mind buckets, even brainwashing Neptune. But before Plankton thinks he is triumphant, SpongeBob, cherishing the fact he is just a kid and that he accomplished a lot in the past six days, uses his imagination by playing a rock song, using his guitar to free Plankton's slaves. Realizing defeat once again, Plankton tries to escape, but is trampled by Bikini Bottom's citizens.
Plankton is arrested and incarcerated, being sent to the "Institution of the Criminally Tiny." King Neptune thanks Mindy for her braveness and unfreezes Mr. Krabs, who graciously gives the title of general manager of the Krusty Krab 2 to SpongeBob. SpongeBob declares this to be the greatest day of his life.
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