Kung Pow fighting Taffy.
The Candy Factory is Taffy's stage in ClayFighter 63⅓ and ClayFighter: Sculptor's Cut. It seems to have an unfinished background, as one wall is completely black. The door next to the large chocolate bunny leads to Santa's Toy Factory and in the middle of the stage is strangely a Taffy emblem which possibly acts as a warp to Santa's Workshop.