The patty is very old and moldy. When eaten, it will give one severe food poisoning. When SpongeBob takes it out from under the grill, he describes it as cold and hard and knows that it is quite possible that it rolled under there years ago.
Role in episode
During closing time, SpongeBob finds the patty under the grill and he throws it away but is quickly stopped by Mr. Krabs. SpongeBob tells Mr. Krabs that they should throw the patty away because it is expired, though Mr. Krabs tells him that he cannot make another Krabby Patty until the rotten patty is sold. Squidward finds out about the order and is disgusted by the patty before trying to sell it to a customer, who flees in horror.
Weeks later, the patty is not sold to any customer because it is spoiled and inedible. Mr. Krabs wonders why as Squidward angrily tells him that the patty has gone bad, but Mr. Krabs ignores him. The patty has become sentient enough that it barks like a dog while being kept inside a cage.
To prove SpongeBob and Squidward wrong, Mr. Krabs takes a bite of the patty and then turns green due to food poisoning, being sent to the hospital afterwards. Despite that, Mr. Krabs still asks SpongeBob to wrap up the patty as he still thinks it is edible.