The patties are light yellow and spotted with light olive-green dots, just like SpongeBob. They were originally normal Krabby Patties that went "stale" because of Mr. Krabs' negligence and are poisonous to eat. This is what gave them their color.
Role in episode
They are accidentally invented when Mr. Krabs wants to make more room in the freezer for the SpongeBob ice cubes as part of the Krusty Sponge restaurant. He thinks that they look like SpongeBob and tells Squidward, the new fry cook, to cook them instead of the normal ones. He explains to him how they came into being and laughs it off. An appalled Squidward questions him on his reason for serving the patties, as Mr. Krabs only increases the price of the rancid patties.
When the Krusty Sponge customers eat them, they become yellow with green spots similar to SpongeBob's holes and have a stomach ache. Eventually, SpongeBob points out to Mr. Krabs on how he poisoned his customers after seeing the effects. Mr. Krabs felt guilty for his act but an agent arrests Mr. Krabs and he is sent to court for it.
Mr. Krabs says that the Spongy Patties are Krabby Patties that were left out for a while. In the episode "Born Again Krabs," another Krabby Patty was left out but it was old and crusty, unlike the Spongy Patty.
Ironically, in that episode, Mr. Krabs himself becomes poisoned by eating it.