Since the 18th century this has been used as a salutation to offer the hope that a happy day being marked would recur many more times. It is now primarily used on birthdays; prior to the mid 19th century it was used more generally, at any celebratory or festive event.

The first record O can find of it in print is in a letter written by Lady Newdigate in 1789 (published in Newdigate-Newdegate Cheverels in 1898):

"Many happy returns of ye day to us my Dr Love."