Gummy Worms are a collectible item in Papa Louie 2: When Burgers Attack!
There are 5 Gummy Worms scattered throughout Mount Monterey (Level 5) that need to be collected to earn a Warp Key. Characters with the Ground Pound skill (Big Pauly, Kahuna, and Kingsley) are able to reach all five worms.
According to a Quinn's Q&A article :
"Gummy Worms are not native to Mount Monterey. Professor Fitz believes they originate from the far reaches of Munchmore in an area that he calls the Gummy Grotto, though no one has traveled that far to find out if it's true. Gummy Worms are a favorite of the Lettuce Larks, and it seems they've flown to the worms' far-off habitat and brought some back to the cheesy mountain."