René begins by filling the audience in on local gossip, as it is far easier to understand than his own problems. Maria comes in and informs him that the resistance (their resistance and not the communist one) has told her that Gruber's dog has returned to him with the sausage; soon after, Edith comes in and tells René that Monsieur Alfonse wants his money back. René then telephones him, to tell him he will have to wait a few days before he can have it back.
Helga enters Herr Flick's office and informs him that lieutenant Gruber has returned to his apartment and has there been apprehended by Von Smallhausen, whom Herr Flick then asks her to send in. Von Smallhausen reports that they caught Gruber by surprise as he was exercising on the carpet and that he is outside. As he is brought in, it turns out he was rolled up in the carpet and it is unrolled on Herr Flick's floor. Herr Flick asks him for the sausage and he says he put it in his fridge, which is where Von Smallhausen found it. As Herr Flick asks for it to be brought in, the two soldiers who brought in Gruber brings in his entire fridge. When Helga opens it for him, he discovers a plate of minced meat and it turns out Gruber has minced the sausage, because the dog would not eat it otherwise. When Herr Flick asks for the painting, Gruber says he put it in the ice compartment. When Herr Flick opens it and takes out the painting, it falls to pieces (having been destroyed by the cold). Herr Flick says he has destroyed a very valuable painting, but Gruber assures him that it was actually a forgery. This leads Herr Flick to three conclusions. Either, somebody at the café has substituted the paintings, or somebody in the resistance has substituted them, or Gruber has done it. When they all agree that the most likely scenario is that it was done by somebody at the café, Herr Flick orders Gruber to "wheedle" with René, to try to locate the real painting. If René will not "squeel", Gruber is to run his tank (armoured car) through the café.
Fanny and monsieur LeClerc are in her bed, when the bedknobs start flashing. As Fanny screams, the airmen, who are now dressed as ordinary Frenchmen, get out from under the bed, where they are hiding. Since they know what the flashing knobs mean, they get the radio and try to answer. However, as the London contact addresses them in French, they do not understand the message. However, Fanny and LeClerc get out of bed and answer the call.
- Fanny: "Allo, allo, this is Nighthawk's mother-in-law".:London: "Allo, allo. Captain Hook is waiting for Peter Pan in Never-neverland".
Fanny thinks the message is nonsense, but monsieur LeClerc realises it is in code and gets the code book. However, the printing in it is too small for either of them to read, so they cannot decipher it anyway.
René tells the colonel and the captain he is in a somewhat troublesome situation, since monsieur Alfonse wants his money back and the Germans' part of the deal was retrieving the money. However, since they have not got the sausage back, they will not help René get the money back. Instead, they make arrangements for the girls to entertain them, in exchange for supplies. After they have finished talking, Edith asks René if the Germans will help them get the money back. When he says no, she tells him Yvette has come up with a plan. René, Edith and Yvette go into the backroom, where Yvette reveals that, after some spying, she has found out that monsieur LeClerc is making forged money. The plan is then to give forged money to monsieur Alfonse, if only they can find out where monsieur LeClerc's money is. René will not hear of it, but when he realises they will not get the real money back, he agrees to the plan. As Maria shows LeClerc into the room, René tells him that the café is on fire. This makes him panick and try to save his forged money, which turns out to be hidden above the ceiling lamp in the backroom.
Officer Crabtree shows up outside the café and asks Yvette if he can have a word with René. When René joins him at his table, he tells him that Michelle will turn up shortly - which she does after he has left. She turns up, wearing bandages and carrying a crutch, being pushed in Fanny's wheelchair. She gives René the same code ("Captain Hook is waiting for Peter Pan in Never-neverland") that Fanny received on the radio. He does not know what it means, so her assistant Lizette tells him straight away: the escape plan for the British airmen (flying away in a museum airplane powered by a lawnmower engine) has been approved by London. It turns out the resistance have already obtained the engine, from General Von Klinkerhoffen's own mower. They have hidden it in the wheelchair and they leave it there.
As they leave, lieutenant Gruber shows up in his little tank. As René pours him a cognac at the bar, he tells him what Herr Flick has ordered him to do and that he is not happy about it. Before the threat of having his café run through by the tank, René reveals to Gruber the whereabouts of the original painting. Gruber tells him to give it to Herr Flick, but as he cannot do this (then, the colonel would have him shot), Gruber offers to make another forgery, to put in a new sausage. René is to come to his quarters at night and hand over the original, so Gruber can copy it.
As Maria and Yvette are in the kitchen, cooking, captain Geering comes in and leaves the supplies to them. As he accidentally drops Maria's bicycle lamp battery in the frogs legs soup, the legs start to wiggle about.
As Herr Flick invites Helga to be his partner at the annual Gestapo dance in Berlin, he teaches her the Gestapo dance, which she must perform when they dance together. The dance turns out to be a Gestapo version of the Hokey-Cokey. However, he is interrupted by a telephone call from Gruber, informing him that he is very positive about finding the painting. At the same moment, Von Smallhausen enters the room and informs them that general Von Klinkerhoffen's lawn mower engine has been stolen.
René arranges for Maria to deliver the "real" sausage to Gruber that night; the sausage hidden across her bosom. After she has left, Yvette comes into the kitchen and tells him Edith wants to see him in the backroom. As they have a quick cuddle, Edith comes in and finds them embracing. René explains he is comforting Yvette, because her grandmother just died. When she has left, Edith tells René she was having a look at their wedding photo and it made her realise they should have a new wedding, since everybody expects it. The next moment, monsieur LeClerc comes in and tells them monsieur Alfonse is approaching in his hearse - as they can hear from the hooves clatter and Alfonse's screams outside. When Edith has gone out into the café to attend to him, monsieur LeClerc demans René get his money back, after monsieur Alfonse is satisfied with it.
Monsieur Alfonse arrives, crashing through the café door, stopping Edith from breaking into song, as she was about to. Alfonse informs her that the reason he came barging in like that was that his new horse is not used to the hearse and it has therefore been difficult to drive. As he asks for his money, René gives him the box where they keep the forged money. As he is relieved to get his money back, Alfonse gets in a generous mode. Not knowing that the money is forged, he offers to buy everyone a drink and even gives Fanny some money to buy a new hat. He also pays for the crushed front door. The situation has become quite desperate, since their cover will be blown, if anybody finds out the money is forged, which is very probable to happen if Fanny uses her money to buy that hat. René panicks when he learns that Fanny is sitting in the wheelchair (where the engine is hidden). When monsieur LeClerc is about to take her to the milliner's, the engine underneath the chair starts, and instead of pushing the wheelchair, LeClerc is dragged along with it. He and Fanny drive through the square, with René, Edith and Yvette chasing after them.