It is a light green soup that is includes an old Krabby Patty, two moldy pickles, and smashed potatoes that look like Squidward into it.
Role in episode
The Krabby Soup is the main focus of the episode. When Mr. Krabs tells the hippies they cannot be on Krusty Krab property to warm up, the hippies go inside the Krusty Krab kitchen and find a soup vat. Due to it still cooking, it is quite warm, so they decide to live in the soup. The hippies hide inside the soup for most of the episode; occasionally leaving when Mr. Krabs draws them out.
At the end of the episode, Mr. Krabs manages to move them over to Squidward's bathtub.