A Spintax {Task|Problem|Question}

Pyth, 18

V5sOMcR\|scR\{cz\}

Try it online here

Explanation:

V5sOMcR\|scR\{cz\}                     : z = input()
V5                                     : do this 5 times
              cz\}                     : split z on the } character
          cR\{                         : split each element of the resulting list on {
         s                             : join the list of lists back into a list of strings
     cR\|                              : split these strings on the | character
   OM                                  : Choose a random element from each inner list
  s                                    : join those choices, and print them

Ruby, 46

With command-line flag -p, run

($_*=5).gsub!(/{(.+?)}/){$1.split(?|).sample}

Read in a string with a trailing newline. Concatenate it to itself 5 times, mutate it in place, and output the result. /{(.+?)}/ is a regular expression with a lazy quantifier: without the ?, it would match the leftmost { to the rightmost } instead of the nearest one. $1 is a magic variable referring to the first capture group in each match, while the ?| literal refers to the | character. sample is an array method returning a random element.

CJam, 25 22 19 18 bytes

q5*'}/{'{/~'|/mR}/

This code requires the input to contain a trailing newline.

Try it online in the CJam interpreter.

How it works

q     e# Read from STDIN.
5*    e# Repeat the input five times.
'}/   e# Split at right curly brackets.
{     e# For each chunk:
  '{/ e#   Split at left curly brackets.
  ~   e#   Dump both chunks on the stack.
  '|/ e#   Split the right chunk at vertical bars.
  mR  e#   Select a chunk, pseudo-randomly.
}/    e#

In each iteration, two chunks (one constant, one variable) are left on the stack and will be printed when the program exits.