The episode starts on a stormy night, with customers leaving the Krusty Krab with an umbrella but end up getting carried away with the wind. Squidward, SpongeBob and Mr. Krabs are about to leave the Krusty Krab when an old hagfish named Madame Hagfish appears at the door of the Krusty Krab. Squidward is afraid of her and tells her that the Krusty Krab is closed, but she ignores him and orders. She attempts to convince Squidward to give her a Krabby Patty but he refuses, because it was closed and she did not have the right and/or enough money (She has 3 seashells). After various attempts to make her leave, SpongeBob feels sorry for Madame Hagfish and whispers to her. The Hagfish then leaves and claims that they have not seen the last of her. She then leaves along with the storm and Mr. Krabs questions SpongeBob on what he whispers and makes a joke. SpongeBob then laughs suspiciously.
Later, when the Krusty Krab closes, SpongeBob secretly goes behind the Krusty Krab to give The Hagfish two delicious Krabby Patties before being caught by Mr. Krabs. It is revealed that was what SpongeBob whispered to The Hagfish. Mr. Krabs yells at SpongeBob and takes the patties. The Hagfish becomes furious and chats secret words along with the phrase "I hereby curse the Krusty Krab" which supposedly puts a curse on the Krusty Krab before flying away. SpongeBob becomes very worried about this but Mr. Krabs says that it is a bunch of nonsense.
The next day, Mr. Krabs watches out the door the whole day and there are no customers. He says he has a funny feeling about the so-called curse. Suddenly, a plate falls from the attic of the Krusty Krab. It startles Squidward, making him drop his coffee and starting a fire, burning much of Mr. Krabs' money. SpongeBob attempts to put the fire out, but just ends up turning all of Mr. Krab's money to ash. Mr. Krabs and SpongeBob then set out to try to find the Old Hagfish in hope that she would lift the curse.
It takes them many hours to find her but they finally find a covered wagon that she lives in. Mr. Krabs begs for her to lift the curse. She agrees on a compromise. They must find a sacred golden doubloon from the deadly golden eel. They find the eel (who is sleeping inside a cave full of green goo that SpongeBob identifies as "leftover pudding"). They try to get the doubloon from him but SpongeBob trips, thus waking him up. The eel grabs Mr. Krabs and attempts to suffocate him. SpongeBob then hits the eel lightly on the neck but the doubloon flies out of the eel's throat and Mr. Krabs catches it. They get it to the Hagfish, who uses it for her laundry machine. The Hagfish agrees to lift the curse and takes the closed sign from the Krusty Krab's front lawn, saying that she would not waste real hexes on Mr. Krabs. Many customers then show up at the Krusty Krab. Inside the Krusty Krab, Mr. Krabs again says that there is no such thing as curses, or witches, or magical sea creatures. As the episode ends, the Krusty Krab begins shaking, the electric eel pops up from underground scaring away all of the Krusty Krab's customers.