In celebration of it being Sunday, SpongeBob makes a sundae using unconventional ingredients because he does not have any ice cream left and because bananas and cherries are "boring." After using ketchup and onions, he decides that he wants to put peanuts in it. However, he does not have anymore, so he uses the peanut plant sitting on his bathroom windowsill. He offers Gary some of it, though the latter turns it down, so SpongeBob digs in and eats the whole thing with pleasure.
It gives SpongeBob bad breath that causes everyone in Bikini Bottom to avoid him, excluding Patrick because he does not have a nose. Since SpongeBob does not realize it is because of his breath, he assumes it is because he is ugly.
Later in the episode, Patrick tries some of the sundae, causing SpongeBob to realize that it gave them both rancid breath.
Role in Stinky Swagger
SpongeBob must collect peanut onion sundaes in order to keep his bad breath.
In Battle for Bikini Bottom, the sundae was originally going to be used as a power-up that would allow SpongeBob and Patrick to run faster and destroy Stone tikis. However, this was scrapped before the game's official release.