This is a fact that has actually changed in the past year in the terms and conditions of Bonvoy.
Last year I experienced this very issue with a Westin Resort. At that time the verbage for legacy starwood hotels (including resorts) provided 750 points or continental breakfast for a closed lounge or no lounge. That verbage is now gone.
It has not changed. Even four years ago, in the Marriott Bonvoy Loyalty Program Terms & Conditions (archive captured March 31, 2019), the "Guaranteed Longe Access" chart's row for "Sheraton, Le Méridien, Westin (Resorts included)" indicates "No alternative offered when Lounge is closed" and "N/A" under Guest Compensation. You can see it yourself on the archived version (can be slow to load):
https://web.archive.org/web/20190331...rms/default.mi
That makes sense. Then, as now, these Starwood legacy brands were supposed to offer "breakfast in restaurant" as a Welcome Gift choice for Platinum Elite and above. (In comparison, at non-resort properties of five Marriott legacy brands, there is no such Welcome Gift choice, but the lounge access alternative rule serves as the breakfast benefit, even when there is no lounge.)
My issue was I selected breakfast (meaning hot breakfast) for my welcome amenity. All I got was fruit and sweet bun with a charge for coffee and juice.
I agree. That's completely unacceptable. A reasonable person would not consider that to be "breakfast in restaurant" at a 4-star hotel.