The man eventually surrended to police at around 4.20pm yesterday (Wednesday).

Police were called to the restaurant just after 8am with reports there was an armed man inside, a police spokeswoman said.

"It's believed a number of shots were fired but no one has been hurt," she said.

Staff and customers who were inside the restaurant had escaped, but the gunman was still inside, she said.

One man, who identified himself only as Glen, told Fairfax Radio he was having breakfast in an alcove of the McDonald's outlet when the first shot was fired.

He said 20 to 30 people were inside the restaurant at the time.

"I'd just ordered my meal, and I was finished eating my burger and was having a coffee reading the paper ... and the first thing that I was aware of was a shot.

"What I actually thought it was, was a loud balloon going off, and I looked over the alcove with some other people and saw the guy standing there the gun pointing in the air.

"It was a small handgun, but I really just had a quick look, then like everybody else ... we just ran out the side.''

Glen said he stopped traffic entering the service centre, which includes a BP petrol station, until police arrived.

"I went outside, returned to my car and stopped the cars going into that whole service area,'' he said.

"Then when I realised that the police were there and they'd set up a perimeter, there was nothing I could do, so I left.''

A number of police units were at the restaurant, and officers were negotiating with the man, a police spokeswoman said.

The Oxley Highway has been closed between Pacific Highway and Fernhill Road. A McDonald's spokeswoman could shed no more light on the incident.

* Additional information from smh.com.au