The chocolate cake, which appears inanimate when the Chef is decorating it with frosting and fruit topping, suddenly comes to life as he is about to cut it. The cake's mouth, located between its two layers, spouts incomprehensible Japanese phrases to combat the Chef's incomprehensible Swedish ones.
The Chef, however, armed with a translation book and a "cakenschmooscher" (a baseball bat), brings the cake to a speedy and messy demise.
The Muppet Morsels on The Muppet Show: Season One DVDs note that, after the cake has been destroyed by the Chef, the hole in the table through which it was operated can be seen. Similarly, the cake that gets squished is a real cake, as opposed to a Muppet.