Cheers is hosting a Bloody Mary contest. The gang seek to win against their rival, Gary's Olde Towne Tavern, yet Woody inadvertently foils his gang's every scheme. To compensate that, Woody eavesdrops at Gary's (Joel Polis) bar, but ends up tied and hanged upside-down outside Cheers. When the gang scold him, Woody becomes angry, quits Cheers, and goes to work at Gary's bar. One week later, Woody tells Gary that the contest already started and admits that his "failing" to notify Gary is part of Sam and Woody's plan to set Gary up. Woody escapes from Gary's gang and later poses as a bearded contest judge, fooling them. Woody admits to the Cheers crowd that the events were all part of Sam and Woody's scheme—but Gary reenters Cheers, winning the contest with the real judge. However, after Gary's gang leaves, Carla pays money, taken from Gary's wallet, to the judge, who is actually her next door neighbor. The Cheers crowd loudly chants "Gary won't win!", but Gary astoundingly reenters to retrieve his wallet, still unaware the real contest has yet to occur.

Cliff trains a new postal worker, Margaret O'Keefe (Annie Golden), and they begin a forbidden relationship at a motel. However, Maggie parked a postal vehicle at the motel, raising suspicions. Cliff fabricates a story of armed thugs hijacking the vehicle for a joyride, but their relationship sours over the deception. Maggie confesses to their superiors and is fired from the US Postal Service, while Cliff is reassigned to another postal district. Maggie decides to work at Canada Post and asks Cliff to join her. Ultimately, Cliff decides to stay when the gang sing "The Ballad of the Green Berets", reminding him that he has friends in Boston and pride in his uniform. Meanwhile, Sam learns that an old song made Rebecca aroused when she was in high school, and suspects from a telephone call with her mother that the song was "You've Lost That Lovin' Feelin' ". Sam plays a recording of the song in the bar office and dances with Rebecca, but she becomes motionless and appears disinterested. When Sam leaves the room, Rebecca's calm façade breaks, and she accidentally kisses Norm, who enters the room.

Rebecca organizes a party for her boss Mr. Gaines's (Richard Doyle) daughter, Kelly (Jackie Swanson), enlisting Woody and Sam to serve guests. Woody gets into trouble conversing with sophisticated but brutish Nash (Tyrone Power Jr.) and his friends, almost leading to a brawl. Sam belays the fight—which resumes the following day at Cheers when Nash knocks out Woody with one punch. To get even, Woody asks out Nash's girlfriend, Kelly Gaines. Woody asks Mr. Gaines permission to date Kelly, but neither he nor Nash approves of Woody's lower-class status. However, Kelly decides to date Woody to spite Nash for domineering her. Eventually, the two realize they like each other.

Rebecca's actress sister, Susan (Marcia Cross), arrives at Cheers to reconcile with a displeased Rebecca. Sam sees their estrangement as seduction leverage and takes them to lunch at Melville's. Sam questions why the sisters argue, and Rebecca admits to battles over past love interests before storming out. Exploiting their rivalry, Sam claims that Rebecca is attracted to him, gaining a date with Susan. When he notifies Rebecca, she becomes furious and tells Sam to break it off so she can date him, albeit reluctantly. Sam postpones his date with Susan to date Rebecca instead. At closing time, while Sam is expecting Rebecca, Susan enters the bar appearing too excited to wait and kisses him in the office. Rebecca catches them and apparently shoots Susan several times. Shocked, Sam helps Rebecca carry Susan's body into the bar, where the gang surprise him by appearing behind the counter. Susan's "murder" was a charade to spite Sam for his behavior, and the sisters are reconciled.

Marriage specialist Dr. Lawrence Crandall (John McMartin) arrives in Boston for a book tour and a drink with Frasier. Dr. Crandall asks Rebecca whether she is attracted to him; annoyed, she repeatedly rejects the idea. Sam and Frasier convince her that the question was professional, so Rebecca goes to Dr. Crandall's table to apologize, but is repulsed when he comes on to her again. Unable to convince Sam and Frasier that she is being sexually harassed, Rebecca drags Sam to Dr. Crandall's hotel room. There, they find a maid, Maria (Fabiana Udenio), in the closet and a violinist entering the room. Dr. Crandall admits that he planned to seduce Maria and fears that his career and fifteen-year marriage with Valerie (Joanna Barnes) would be over if exposed. When Valerie arrives, the guests go inside the closet at Lawrence's behest. The Crandalls plan to have dinner together, but Lawrence accidentally puts on Maria's blue coat, so Valerie senses someone inside the closet. When Valerie demands they explain, Rebecca reveals Lawrence's conduct. Valerie is unconvinced as Lawrence passes the claims as coincidences, so Rebecca insults Valerie and then physically attacks her. Sam and Zoltan restrain and remove Rebecca.

In the Cheers segment, amnesiac Mickey Mouse, reported as missing, enters the bar, unrecognized by bar patrons, to order two root beer floats but is penniless. To compensate, Sam, wanting to seduce Rebecca, tells Mickey to sing "Happy Birthday to You" as a birthday gift to Rebecca, who eventually sobs over being "old and alone." Then Mickey cheers her up by telling her to get a new outlook and appreciation, so Rebecca takes Mickey out to dinner and a movie, much to Sam's chagrin.