This is a pun on 'awful' which means very bad or unpleasant, but 'offal' is used in it's place because it sounds similar and because 'offal' is the entrails and internal organs of an animal used as food, which is something you'd find at a slaughterhouse 
When asked by a Health Department official to describe the mess he saw on the slaughterhouse floor , the USDA inspector replied , ' ' It was just offal . ' '