Jerry, George and Elaine go out to a new soup stand Kramer has been raving about; its owner is referred to as the “Soup Nazi,” due to his temperament and insistence on a strict manner of behavior while ordering. Jerry explains the procedure for ordering, which George accepts, but Elaine rejects. En route, Elaine notices a sidewalk furniture dealer with an armoire for sale and decides to stop and buy it. However, when she returns to her building with it, the building superintendent tells her there is no moving allowed on Sundays.
When Jerry and George get to the soup stand, George follows the procedure but notices that he did not get the free bread with his soup order. Jerry tells him to let it go, but George asks for some and is told he will have to pay $2 for it. When George objects, claiming that everybody in front of him got free bread, he is told that the price for bread is now $3. When George continues to protest, he quickly has his money returned and his soup is brusquely taken back, with the catchphrase “No soup for you!”
Over the past weeks, Jerry has been annoying George and Elaine with his open affection and baby talk (calling each other “Schmoopie”) with his new girlfriend Sheila (Alexandra Wentworth). During another visit to the soup stand, when Sheila will not stop kissing Jerry in the line of customers, the Soup Nazi orders her out of the line, and Jerry is forced to pretend he does not know her. When George finds out, he admits his annoyance with their “baby talk” romantic behavior to Jerry. Jerry later tells Sheila he was just joking at the soup stand and makes up with her. When George finds out, he begins to act similarly with Susan to make a point. Susan misinterprets George’s intentions and thinks that George is finally enjoying showing his feelings in public, continuing to act that way after Jerry again breaks up with Sheila.
Elaine, still awaiting the chance to move her new armoire upstairs, asks Kramer to guard the piece of furniture on the street overnight. When he arrives, she goes to the soup stand to get him soup. While she is gone, some “street toughs” intimidate Kramer and steal the armoire. At the soup stand, Elaine ignores everyone’s prior advice and annoys the Soup Nazi with her behavior. He refuses her soup and bans her from coming to his restaurant for one year. She returns to her building to find Kramer without the armoire.
Later, Kramer, who has become friends with the Soup Nazi, tells him the story of the stolen armoire in passing. The Soup Nazi offers Kramer an antique armoire he has in storage in his basement. Kramer gives the armoire to Elaine as a replacement for her stolen one.
Elaine goes to thank the Soup Nazi for the armoire, but the Soup Nazi angrily declares that he never would have given it to Kramer if he had known it was for her – instead, he would have smashed it to pieces with a hatchet. Offended, Elaine returns home, where she and Jerry subsequently discover the Soup Nazi’s secret soup recipes, which have been left behind in a drawer of the old armoire.
She returns to his shop, recipes in hand, and declares that she is going to destroy him and his business by exposing the recipes. Her glee matches his in the way that he brushed her off earlier. Feeling ruined, the Soup Nazi decides to close the business and move to Argentina and starts giving away his remaining soup, which Newman and Jerry hurriedly try to take advantage of.