Mr. Krabs is the greedy founder and owner of the Krusty Krab restaurant, where SpongeBob works as a fry cook and Squidward works as a cashier. The restaurant's success is built on little competition and the popularity of the Krusty Krab's signature sandwich, the Krabby Patty, the formula to which is a closely guarded trade secret. Mr. Krabs frequently exploits his restaurant's popularity, engaging in price gouging and charging his own employees for use of the building's services.

Krabs' rival and former best friend Plankton operates the Chum Bucket, a failing restaurant across the street from the Krusty Krab.[5] A major plot point throughout the series is Plankton's futile attempts to steal the Krabby Patty formula with the help of his computer sidekick Karen, under the assumption that they would be able to replicate the burgers and put the Krusty Krab out of business. To avoid this, Krabs goes to extreme lengths to prevent Plankton from obtaining the recipe; he even refuses to allow him to buy a Krabby Patty legitimately out of fear that Plankton might use Karen to reverse-engineer the formula. Krabs also makes it his duty to ensure that the Chum Bucket never has any business whatsoever.