Wal-Mart Stores, Inc. (WMT), Walgreen Company (WAG): Supermarkets Preparing to Eat Restaurants’ Lunch

Although grocery stores might be able to siphon off customers from restaurants, tapping into the popularity of fast-casual chains’ ability to provide a reasonable mix of price and quality food, it’s not a two-way street: Panera Bread Co (NASDAQ:PNRA) can’t easily open a produce aisle to attract shoppers. And that may pose a risk to restaurants, which are already competing for scarce discretionary dollars.

According to the Knapp-Track Index of monthly restaurant sales, sales at casual-dining establishments fell 5.4% in February, which was on top of a 0.6% decline in January and a 1.6% drop in December. The tax hikes President Obama pushed through that took effect Jan. 1 seem to be taking their toll.

As noted by the CEO of Brinker International, Inc. (NYSE:EAT), the owner of Chili’s and Maggiano’s Little Italy, “casual dining is not necessarily the bright shiny star that it used to be.”

Now with supermarkets elbowing their way into the space, expect the pressure to build even more on restaurants. It may be time for investors to start eyeballing the grocery chains for investment ideas and rotate out of the sit-down dining experience.

The article Supermarkets Preparing to Eat Restaurants’ Lunch originally appeared on Fool.com and is written by Rich Duprey.

Fool contributor Rich Duprey has no position in any stocks mentioned. The Motley Fool recommends Panera Bread and Whole Foods Market (NASDAQ:WFM). The Motley Fool owns shares of Panera Bread and Whole Foods Market.

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