It is a Krabby Patty wrapped up and placed in a prison-themed box Mr. Krabs made. It has a prison number written in black text which shows the numbers "03678." It comes with a free toy shackle.
Role in episode
When Fred says he dislikes that there are locked up men inside the Krusty Krab since it makes him nervous, Mr. Krabs says that since the restaurant is now prison-themed, there is a new Prison Patty that comes with free shackles. Fred likes the idea, along with a prisoner. Mr. Krabs then tells everyone that they can now lock up their hunger and throw away the keys, and then Mr. Krabs comes to SpongeBob and says that the crisis has been averted.