It is a type of chum that is made by the Krusty Krab, created by SpongeBob and Mr. Krabs. There is a stick on the blob of chum with the Krusty Krab's initials in red text.
Role in episode
Nat Peterson walks into a shortcut that reads "Shortcut to the Chum Bucket" but instead ends up in the Krusty Krab. Mr. Krabs and SpongeBob introduce Nat to their own version of chum, which he dislikes and throws up after giving it a try, so heads back to the Chum Bucket.
After Nat tastes the chum and throws up, he comments that it's "the second foulest thing he had ever tasted," implying that Plankton's chum is the foulest thing he has tasted.
This proves that Mr. Krabs is able to make chum better than Plankton, even though chum is the only thing that Plankton can cook.