Thank you for standing by and welcome to the Meituan fourth quarter and full year 2023 earnings conference call. All participants are in a listen-only mode. There will be a presentation followed by a question and answer session. If you wish to ask a question, you will need to press the star key followed by the number 1 on your telephone keypad. I would now like to hand the conference over to Scarlett Xu, VP and Head of Capital Markets. Please go ahead.
Thank you, Operator. Good evening and good morning, everyone. Welcome to our fourth quarter and fiscal year 2023 earnings conference call. Joining us today are Mr. Wang Xing, Chairman and CEO, and Mr. Shaohui Chen, Senior Vice President and CFO of Meituan. For today's call, management will first provide a review of our fourth quarter and fiscal year 2023 results and then conduct a Q&A session. Before we start, we would like to remind you that our presentation contains forward-looking statements, which include a number of risks and uncertainties and may differ from actual results in the future. This presentation also contains audited non-IFRS accounting standards financial measures that should be considered in addition to and are not a substitute for measures of the company's financial performance prepared in accordance with IFRS accounting standards.
For a detailed discussion of risk factors and non-IFRS accounting standards measures, please refer to the disclosure documents in the IR section of our website. Now I will turn the call over to Mr. Wang Xing. Please go ahead, Xing.
Thank you, Scarlett. Hello, everyone. During 2023, China's local commerce industry experienced a faster growth than other retail sectors. As an industry leader, Meituan achieved healthy and high-quality growth in core businesses. Total revenue increased by 25.8% year-over-year, to CNY 276.7 billion. Adjusted net profit increased substantially to CNY 23.3 billion, from CNY 2.8 billion in previous years. In the fourth quarter, user-based and merchant-based both accelerated growth, setting new records. Daily active users also grew by over 30% year-over-year to record highs. These results laid a solid foundation for our long-term business expansion in the future. In 2023, daily order volumes of on-demand delivery increased by 23.9% year-over-year to 60 million. Peak daily order volume of food delivery exceeded 78 million on the beginning of autumn. Peak daily order volume of instant shopping surpassed 13 million on Chinese Valentine's Day.
We continue to cultivate consumer behavior in adapting to the Everything Now lifestyle. We also fostered a sustainable development ecosystem for our consumers, merchants, couriers, and business partners, and facilitated the high-quality growth of on-demand retail in China. Moreover, our in-store, hotel, and travel businesses achieved explosive growth of GTV, merchant-based, and user-based. With time expanding and online penetration accelerating in a new consumption environment, we effectively satisfied diverse needs from consumers and invigorated local consumption by offering more value-for-money selections through more product formats across broader categories. In future, we will continue to devote ourselves to better serving the needs of our consumers, delivering greater value to merchants, and creating more job opportunities and generating more social value. Now let me walk you through each business in more details. 2023 marks the 10-year anniversary of our food delivery business.
The past decade shows our continuous innovation and growth in a competitive environment. In 2023, we further solidified our market leadership and core competence. Annual transacting user of food delivery continues to grow. Mid- to high-frequency users and their consumption frequency increased steadily. We are delighted to see that food delivery now caters to a much larger consumer base and satisfies more diverse needs from consumers. Having food and meals delivered in 30 minutes has become a new lifestyle. Throughout the year, we proactively iterated our business strategies and refined our operations in products, marketing, and supply to cope with the evolving consumption trends. For Pinh ao fan, we focused on scale expansion and operation enhancement. It allows us to meet consumption demand for value-for-money selection, group purchase, and having them delivered to their doorstep with higher efficiency.
It helped us reach broader audiences, enhance user stickiness, and improve purchase frequency of price-sensitive users. We also put more efforts in high-order value domain by innovating and refining products such as Shen Qiangshou or Yir en S hi No. 1 and Master Order List Xidian Bang. During the process, we strengthened two key competencies. The first one is product display. We enhanced our content production capabilities across various formats, including graphics, tags, videos, and live streaming to nurture a vibrant content ecosystem. The other one is promotional schemes. We upgraded and simplified our membership program to make it easier to use by consumers and merchants alike. Our continuous improvement in a shelf-based model, combined with our improved marketing ability with our mega-hit products, allows us to stimulate consumer demand more effectively.
After five years of rapid growth, Meituan Instashopping has now become a pivotal role in the on-demand retail domain. It connects millions of local retailers and brands with hundreds of millions of consumers. We have successfully cultivated a consumer habit in having everything delivered to their doorsteps in 30 minutes. In 2023, order volume of Meituan Instashopping increased by over 40% year-over-year, showcasing its large growth potential. The user base of Meituan Instashopping not only has higher stickiness but also demonstrates a stronger purchasing power compared to the average food delivery users, with a significant portion being young users. While we continue to improve supply, we noticed that consumers now use Meituan Instashopping more frequently across a wider range of scenarios and time periods. Notably, in the fourth quarter, purchase frequency from core users grew by over 20% year-over-year.
We believe that purchase frequency and upward from these core users still have substantial room to grow. In 2023, our annual active merchants also grew by almost 30% year-over-year. As more offline retailers are tapping into the on-demand channel, the quality and diversity of our supply has enhanced significantly. We partnered with around 400 brands, onboarded more telecom merchants, and supported their transition to online operation. We also expanded our new supply formats to broader regions with Meituan InstaMart, Meituan Shandian Chang, now covering over 200 cities. Our continuous efforts on the supply side have progressively yielded an elevated user experience and sustained user growth. Order volume grew robustly across all categories, regions, and scenarios. Moreover, we continually innovated and optimized our platform solutions to better cope with the evolving demand.
For example, we expanded our coverage for 24-hour pharmacies, collaborated with the Cheng Pharmacies in offering medical insurance payment options, and provided on-demand quick home testing service during the flu seasons. We were the first in the industry to launch an end-to-end solution for home testing, online diagnosis, and medicine delivery to Xin Shang Zhen Zhuan to Mai Yao Dao Jia, and offered the consumer one-stop online health service. Thanks to our past efforts, the value embedded in the on-demand retail and on-demand logistics has been recognized. We believe that having everything delivered to the consumer's doorstep will be the next hero. Historically, driven by growing consumer demand, we continuously moved offline supplies to the online platform and provided reliable fulfillment services. In the next stage, we will transform and penetrate deeper into the industry value chain across all major categories for both food delivery and non-food delivery.
We are absolutely competent in the long-term development of food delivery and instant shopping. Our in-store, hotel, and travel business actively captured the rebound of offline consumption with products and operations further iterated. For the full year of 2023, GTV increased by over 100%, annual transacting users increased by over 30%, and annual active merchants grew by over 60%, all reaching new highs. In 2023, we navigated through the industry evolution and satisfied the diversified preferences from consumers and merchants by business iterations. As a leading online platform, we have the responsibility to drive the industry transformation. During the year, we proactively enhanced our ability to promote mega-hit products and enriched video content offerings. We worked with high-quality merchants and offered consumers a diverse selection of high-quality discounted deals through our special deal session. Consumer mindshare in our low-price offering was further elevated.
Meanwhile, we launched our live streaming programs with a combination of Meituan platform live streaming, and merchant live streamings, and sales team live streaming. This allows us to recommend value-for-money products in a more vivid way and to satisfy consumer needs in stockpiling deals. Transaction scale from live streamings increased rapidly in 2023 with daily live streaming sessions exceeding 10,000 in December. We are glad to see that consumers are increasingly willing to watch live streaming and place orders on our platform. Both special deal sessions and live streaming events help us further solidify our consumer mindshare of everyday low price. Amidst the changing industry environment, we continue to optimize our shelf-based sales model to solidify our competitive edge by offering merchants incentives and joint marketing programs. We have strengthened our partnership with many high-quality merchants and provided consumers with more value-for-money deals.
We also lowered the threshold for subscription-based services, thus accelerating merchant onboarding and significantly expanding our merchant base. In the fourth quarter, we further implemented our direct operations model nationwide to substitute the formal agency model in order to accelerate online penetration and seize future growth opportunities in the lower-tier cities. We are committed to making our platform as a topic for merchants to operate online. Through our continued efforts, we help merchants accumulate valuable digital assets like user reviews and transaction data and provided consumers with a reliable source for making consumption decisions. Additionally, we optimized our theme-based marketing events and organized diversified online and offline promotions for our trusted Must-Eat List Festival and Black Pearl Restaurant Guide, helping merchants enhance brand awareness and improve transaction conversions. The hotel and travel industry experienced the highest rebound in 2023.
Thanks to our accumulated know-how in leisure travel and our unparalleled leadership in the domestic market, we swiftly captured the industry growth. We also deepened our understanding in consumer preferences and improved our supply capabilities to better cope with the evolving demand. In 2023, our domestic hotel GTV increased by over 100% year- over- year. To provide consumers with elevated content experience and cost-effective recommendations, we enhanced our live streaming capabilities. Last year, we further leveraged our unique positioning in the in-store dining domain and offered bundle deals of hotel room size plus dining. In addition, we followed the latest popular trends and launched various marketing campaigns during holidays. Subsequently, room line reservations during holiday seasons broke record highs in 2023. We also maintained a strong presence and made further progress in the high-star domain. GTV from domestic high-star hotels exceeded 20% in 2023.
For alternative augmentations, after achieving absolute leadership in the domestic market, we further expanded supply, improved service quality, and enhanced user experience while continuing to drive industry development in the future. Looking ahead, we will continue to solidify our competitive moat, bringing larger value to both consumers and merchants, and capture more growth opportunities for our in-store hotel and travel businesses. We have full confidence in the online penetration potential of our services retail, and we are committed to facilitating the digital transformation process of local services. Now, for new initiatives, Meituan Select, Meituan Youxuan further improved operational efficiency on a year-over-year basis, and we further expanded the business scale in 2023. During the year, we continued to enhance platform supply and provided consumers with more diverse and cost-effective products. We also increased the density of the pickup station so that we can reach broader consumers.
By the end of 2023, we have accumulated over 500 million transacting users. This new user base may bring more cross-sell opportunities for the platform in the future. However, the business still had significant operating loss in 2023 with a high operating loss ratio. In 2024, we will further iterate our business strategies and accelerate loss reduction. We will focus on building long-term competencies and improving user experience rather than focusing on market share. Facing the new macro environment and competitive dynamics, we proactively responded to the changes and iterated our business operations in 2023. We enriched our product and service matrix, served the broader consumers as a merchant base, and solidified our consumer mindshare. As you may have noticed, we have recently adjusted our organizational structure.
We think this adjustment will lead to more synergies among core businesses and further solidify our competitive advantages so that we can serve our consumers and merchants with better quality and higher efficiency. We believe new consumption demands will continue to emerge, and digital transformation of the local commerce industry is inevitable. As the industry leader, we are well positioned to adapt to these changes and capture more growth opportunities along the journey. We will firmly implement our retail-plus technology strategy. We are fully committed to accelerate the digital transformation process of the industry and work toward our mission to help people eat better and live better. With that, I will turn the call over to Shaohui for an update on our latest financial results.
Thank you, Xing. Hello, everyone. I will now go through our fourth quarter financial results. During the quarter, our businesses delivered steady growth, with our total revenue increasing by 22.6% year-over-year to CNY 73.7 billion. Cost revenue ratio decreased 5.7 percentage points year-over-year to 66.1%, primarily due to the improved gross margin of our food delivery, Meituan Instashopping, and goods retail business, as well as the increased contribution of online marketing service revenue. Selling and marketing expenses ratio increased 4.8 percentage points year-over-year to 22.7%, mainly due to our increased promotions, advertising, user incentives, and employee benefits to stimulate consumption and solidify our competitive advantages. R&D expenses ratio decreased year-over-year to 7.4%, primarily benefiting from improved operating leverage. G&A expenses ratio was 3.7%, remaining stable on a year-over-year basis.
Our focus on stimulating high-quality growth and improving operating efficiency drove substantial year-over-year growth in total segment operating profit and operating margin. Total segment operating profit increased from CNY 815.2 million to CNY 3.2 billion, and the operating margin increased from negative 1.2% to 2.4%. On a consolidated basis, our adjusted net profit increased significantly year-over-year, reaching CNY 4.4 billion this quarter. Turning to our cash position, as of December 31st, 2023, we maintain our strong net cash position with our cash and cash equivalents and short-term treasury investments totaling CNY 145.2 billion. In the fourth quarter, cash generated from operating activity improved significantly year-over-year to CNY 10.4 billion. Now, let's look at our segment results, starting with core local commerce. Our core local commerce segment's revenue increased by 26.8% year-over-year to CNY 55.1 billion.
Operating profit increased year-over-year to CNY 8 billion. Operating margin was 14.5% this quarter. On-demand delivery order volume growth achieved 25.2% year-over-year this quarter. For food delivery, we focus on driving the consumption frequency of our high-quality users while more effectively meeting the needs of mass market consumers for low-ticket-sized meals. As a result, order volume achieved nearly 25% year-over-year growth despite external challenges. Revenue grew at a slower pace than order volume, mainly because of last year's VAT exemption policy on courier service and this year's decline in average order volume. Q4 last year was an unusual high base in AOV, with a bigger portion of orders coming from large-ticket-sized orders such as family orders and long-distance orders. In time, many SMEs also suspended operations in Q4 last year. However, we are pleased to see that merchants' marketing demand remained strong during this quarter.
The expansion of both advertising merchant base and their uptake drove the strong growth of online marketing revenue. In time, we continue to optimize delivery efficiency and benefit from the abundant supply of couriers. Order volume growth also drove economies of scale on the cost side. These favorable factors helped to partially offset the increase in subsidy and decline in AOV. For Meituan Instashopping, order volume maintained healthy growth, with daily average order volume reaching 8.3 million this quarter. Our strategy has been focused on strengthening consumer mindshare, broadening the variety of supplies available on our platform, and optimizing operations. These efforts yield positive results, with both the scale of transacting users and their purchase frequency growing rapidly. We are also pleased to see that more consumers place orders in more than one category.
With regard to its unit economics, AOV declined year-over-year against last year's extreme high base due to consumers' surging demand and stockpiling daily necessities and medicine. Despite this, we witnessed a positive trend with more traditional offline retailers and brands adopting their own on-demand delivery channel and allocating marketing budgets to our platform. This has translated into another quarter of remarkable year-over-year growth in online marketing service revenue. Improved advertising monetization, abundant courier supply, and enhanced economies of scale together help improve the unit economics on a year-over-year basis despite lower AOV. Now, let's turn to our in-store hotel and travel business. Growth momentum in service retail remained strong during this quarter. We continue to support merchants, further enhance existing user mindshare, and penetrating into lower-tier cities At the same time, we refine and diversify our marketing strategies, enhance our content capabilities to successfully drive growth.
GTV for in-store continues its rapid growth trajectory this quarter, with both the number of transacting users and the number of merchants reaching new highs. Our hotel and travel business also maintained its robust growth in both room size scale and ADR this quarter. Revenue of in-store hotel and travel grew at a slower pace than GTV due to higher merchant incentives and lower subscription-based service charge per merchant. Growth of transaction-based service revenue was very strong year-over-year. Digitization of various local service industries has been gaining momentum. For example, the consumer demand for services like KTV, beauty, sports, and fitness, along with other leisure and entertainment services, was particularly high. Growth of online marketing service revenue lagged behind all commission revenue. However, there was an uptick for the number of advertising merchants of our performance-based ads on a sequential basis.
Marketing margin further declined on a sequential basis, mainly due to our increased marketing efforts and strategic investment in lower TFCDs. These initiatives will aim at capturing growth opportunities, strengthening our competitive advantages. We strongly believe that the market is still at a high growth stage. There is particularly large potential for online penetration in lower TFCDs and in a variety of new categories. Turning to our new initiative segment. During this quarter, revenue in this segment increased by 11.5% year-over-year to CNY 18.6 billion, mainly due to the development of our goods retail business and partially offset by the contraction of our self-operating ride-sharing business model. The segment's operating loss and operating loss ratio both narrowed sequentially to CNY 4.8 billion and 26%, respectively. For Meituan Select, our improved business operating efficiency led to a narrowing of the quarterly operating loss ratio on a sequential basis.
Meanwhile, many of our new initiatives continue to make good progress, enhancing their operating efficiency. To conclude, our core local commerce segment performed resiliently in the new consumption environment and achieved a number of impressive milestones this year. In time, our commitment to high-quality growth and efficiency improved as a result of notable EBITDA and free cash flow improvement. Looking ahead, we will continue to articulate our core business, capture more growth opportunity, and enhance long-term goals. We will also pursue high-quality growth strategies for our new initiatives and continuously improve the operating efficiency. Our confidence in our business fundamentals and the long-term growth potential remains intact. With that, we are now open for Q&A.
Thank you. If you do wish to ask a question, please press star number one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star and then two. If you are on a speakerphone, please pick up your handset to ask your question. Your first question today comes from Ronald Keung from Goldman Sachs. Please go ahead.
Thank you, Xing, Shaohui, and Scarlett. The company announced a change of organizational structure recently. Can management share more color on this change and specifically about the purpose and how we will realize more synergies going forward with this? Thank you.
Thank you, Ronald. Yes, we made some adjustments to the organizational structure recently. After the change, on-demand delivery, in-store, hotel and travel, and then Meituan platform and R&D now reports to Mr. Wang Puzhong. Meituan Select and Xiaoxiang Caoshi and our B2B food distribution service, Kuailv, do reports to Mr. Guo Wanhuai. Mr. Zhang Chuan remains in charge of Dazhong Dianping and our restaurant management system and bike sharing and e-bike sharing and power banks. After the change, autonomous delivery vehicles, drones, and the overseas business unit reports direct to me. So today, our businesses have covered more than 2,800 cities and counties in China. We connect tens of millions of merchants with over 700 million consumers. Looking ahead, we aim to cover all categories and scenarios of local services, providing closed-loop solutions from on-demand discovery to service procurement.
We want to assure consumers that we provide high-quality services and bring them comprehensive experience. After this organizational change, we will be able to realize a better synergy between on-demand delivery and in-store hotel and travel. On one hand, the two business teams can work more closely and provide better services to our merchants, bringing merchants more value and improving merchants' operating efficiency. On the other hand, the integration of business teams can help us better identify consumer demand, enhance our products' pricing competitiveness, and also improve consumer experience and strengthen our consumer mindshare. That Meituan is the go-to platform for local services. In addition, the organizational change can also enhance our operating efficiency and unlock cost synergies. By consolidating Meituan platform and R&D, we want to improve organizational efficiency and enhance user experience.
After changing their report line to Wang Puzhong, they can better support the long-term development of core local commerce in traffic and products. Overall, this is a strategic move. We believe that this change will lay a groundwork for the future so that we can deliver better and more comprehensive services to both merchants and consumers. Thank you.
Thank you, [audio distortion]
Thank you. Your next question comes from Thomas Chong at Jefferies. Please go ahead.
Hi. Good evening. Thanks, management, for taking my question. There have been some speculations regarding the potential movement of other food delivery players. Could management share insights on the competitive landscape of food delivery? Considering the current macro environment, how should we project growth for food delivery this year? Is it on a declining trend of AOV expected to continue in 2024, and will it impact unit economics? Is there any change in the long-term outlook for the growth and profitability of the business? Thank you.
Thank you, Thomas, for the question. There have been several set questions. Let me answer them one by one. The first one is on competition. Yeah, we understand there have been different rumors about the change of the competitive dynamic, but this is not new to us, to Meituan food delivery business. As you may be aware that Meituan food delivery business' growth journey has never been short of competition. Actually, we have been through very fierce competition, but in the last many years, we continue to increase market share, improve efficiency, and achieve the target that we set for ourselves. Currently, the industry has gained to a relatively more mature stage, with more and more users having used these services and built their mindshare about which brand, which platform can provide the services.
As a leader in this industry, we now serve nearly 490 million annual transaction users and over 4.6 million annual active merchants. We believe we have built the world's largest and most efficient on-demand delivery network. Our scale of economy, our network effect, and also our very strong brand are all very high-entry barriers. So regardless of the move of other players, potentially, we remain confident that we can maintain our clear industry leadership. Together with your second question, I want to emphasize that we are also continuing to invest into ourselves and continuing to innovate ourselves to meet the changes of different consumption trends, to meet all kinds of consumers' needs through our innovative, diverse product offerings.
For example, our Pin Hao Fan business, we focus on high-quality growth and enhance our value for money for our offerings, enhance user experience, realize higher fulfillment efficiency, and better match price-sensitive consumers with affordable and high-quality merchants. We also continue to further articulate our market product promotions like Shen Qiangshou and satisfy consumers' non-instant demand. We also continue to enhance our operating efficiency for the shelf-based model, improve supply across all different categories, and optimize marketing efficiency for the merchants. Over the past few years, Meituan's high-frequency user stickiness further improved, providing solid foundation for the healthy growth of our food delivery business under a complex macro environment. Meanwhile, we continue to articulate our strategy to boost consumption frequency from lower-frequent users. We expect our food delivery order volume will maintain very healthy and solid growth in 2024.
We also continue to work towards our long-term growth target and continue to grow our Meituan Instashopping business. We are seeing that the synergy between the food delivery and Meituan Instashopping continues to be strengthened in areas such as user-based marketing promotion, as well as our delivery network, and expand the on-demand retail to broader regions and cover more diversified categories. We think in 2024, consumption trends will still affect average order value. Due to last year's high base, both AOV and new economics have a downward trend year-over-year in Q1. We focus on high-quality growth and continue to balance the growth with profitability in the year of 2024. So we will refine our subsidy strategy to improve our efficiency. We also see further growth room for our advertising monetization. As we scale up, we will unlock more operating leverage.
Ending consumption trend, we drive continuous articulation on the supply side. We think that food delivery operating profit will continue to grow healthily this year. In the longer run, there is still big room to further optimize our business efficiency as we scale up. We are confident that we can bring more value to both the merchants, to the consumers, to the delivery riders, and benefit the whole ecosystem. Eventually, the profitability of food delivery will reflect the value that we create. Thank you.
Thank you.
Thank you. Your next question comes from Kenneth Fong at UBS. Please go ahead.
Xing, Shaohui Chen, Scarlett Xu. Thanks for taking my question. I have a question regarding the in-store business. So could you provide an update on the recent performance for in-store hotel and travel, Meituan making investment in response to competition last year and expanded into lower-tier cities since fourth quarter, which have notably decreased the OP margin? How does the company assess the ROI for this investment? Could you also please share some color on growth, profitability outlook, and the competitive landscape for the in-store hotel and travel business in 2024, and medium and longer term, please? Thank you.
Thank you for your question on our in-store business. Overall, we are very excited for the fastest growth of our in-store business under this quarter, but also in the overall 2023. As we mentioned in our last quarter, the survey retail market has witnessed rapid growth, particularly online penetration. This surge is closely tied to our proactive investments and also related to more offerings into the industry and the more players participating into this industry. By leveraging our deep industry insights, we have not only deepened our merchant collaborations and chef-based model, but also quickly developed our live stream capability to meet the growing needs. We also launched a special deal section to create a marketplace for price-competitive market products, strengthening consumer mindshare in a value-for-money product. In Q4 last year, we expanded our direct operation model nationwide, replacing the former agency operation model in lower-tier cities.
This strategic move allowed us to effectively tap into the merchant and consumer base in those regions and capture the digital transformation opportunities. Although these investments impact our short-term profitability, the return of our investments, we are significantly benefiting our long-term business. In 2023, we expect fast-expected GTV growth and also fast-expected revenue growth. We also solidify our market share in the local service industry, and our operating profit achieved double-digit year-over-year growth. I also want to share with you that during the Spring Festival, the in-store hotel and travel business continued to break new highs, with daily average transaction value during the holiday period increased by 36% year-over-year and over 150% compared to 2019. The Spring Festival reunions and outings became important drivers for local dining and other local service consumption.
In our cooperation with high-quality restaurants and other local service merchants, we rolled out special deals, live streaming, and scene-based promotions, which led to rapid growth for local service orders. In the first five days of the Spring Festival holiday, order volume for group dining package deals, oriental restaurants, increased by over 150% year-over-year, and order volume for leisure and entertainment increased by 190% year-over-year. Meanwhile, as more and more people chose to travel during these holidays, our transaction value of hotel and travel also significantly increased compared to 2019 and 2023. Through a variety of promotional activities, we offer consumer-grade travel experiences with value-for-money products. Looking ahead to 2024, in a new environment, we will continue to invest to enhance our product capability and continue to solidify consumer mindshare through the articulations in our marketing strategy and our increased content offerings.
We aim to reinforce consumer mindshare for value-for-money and enhance online penetration of the overall industry. We think our in-store hotel and travel business will maintain high GTV growth in 2024. The mid-to-long-term growth of the entire industry, we are continuing to benefit from the increase in online penetration and changes in consumption trends. The gap between revenue growth and GTV growth will narrow. We will continue to assess and adjust our investment efficiency and continue to improve the ROI. On the medium to long-term competitive landscape, we remain very confident. We are very well positioned to serve merchants through their entire business cycle, from daily operation to special promotions, and assist consumers in finding the right stores and discounts more efficiently.
For the chef-based products, leveraging our business development teams' experience in serving all-tier cities and commercial zones, we can help merchants design package deals that better cater to consumers' needs and direct traffic to them with more precincts. We help merchants acquire customers more efficiently under the current market environment and encourage more consumers to shift from offline to online. Our ongoing improvement in live streaming and special deal sections will help merchants promote market products and cultivate consumer mindshare in stockpiling value-for-money deals. It will also help us capture the incremental market growth from the accelerated digital transformation process. In addition, after our organizational restructure, the integration of core businesses will unlock more synergy. Overall, while the entry of other players brings new competition, we also see this investment by different players together driving the long-term outlook of this business.
Short-term profit fluctuations simply reflect the outcomes of our long-term strategic investments. We remain confident in the immediate long-term revenue growth potential and profitability of our in-store hotel and travel business. Thank you.
Thank you.
Thank you. Your next question comes from Ya Jiang from CITIC Securities. Please go ahead.
Okay. Good evening. Thanks for taking my question. Could the management please share some thoughts on the strategy for the new initiative in 2024 and how profitability will be enhanced or losses narrowed, particularly for Meituan Select? And for Meituan Select, what will be the scale of loss reduction? And more directly, would you consider shutting down this business? Thank you.
Thank you. To begin with, there are quite several new initiatives in our new initiative segment. Let's talk about them in separate orders. First, let's talk about all other new initiatives excluding Meituan Select. In this bucket, we will continue to optimize the operation. Actually, in the past several years, we have made very good progress on several of these new initiatives. For example, our restaurant management system, the restaurant SaaS business, we have been investing in that since 2016, so almost 80 years ago. Last year, we finally made it cash flow positive, and we have been the market leader. Now, more and more restaurants are running their whole operation on our SaaS system, not just their food delivery, not just their coupon business, but their whole operation on our restaurant SaaS business.
Another good example is Kuailv, the B2B food service distribution business. We started that in 2015, so even longer history than our restaurant SaaS. Also last year, we have finally achieved a cash flow break-even in that business. Also, we are leading in market shares. Both businesses are still growing at a very good growth rate. Those are some successful examples. It's more important that we expect all the new initiatives, including Meituan Select combined, will achieve break-even. They will achieve a break-even on a collective basis in 2024. Going forward, it will get better and better as we continue to enhance our efficiency, and we expect profitability further improve. Now, let's talk about Meituan Select, which is a very big part of our new initiative segment.
The growth slowed down in 2023, and as the market size of community e-commerce was relatively flat on a year-over-year basis, the whole industry growth slowed down mainly due to the macro headwinds and consumers returning to offline channels post the public reopening. We tried very hard, but despite the year-over-year efficiency improvement, Meituan Select still made significant loss with a rather high operating loss ratio during 2023. There are several reasons. The first one is scale growth was slower than expected, which made it difficult to meaningfully lower procurement costs per item. The second reason is, of course, fierce competition, and that makes it difficult to improve price and market ratio and to lower subsidies. We have been investing in Meituan Select for almost four years now. We launched our business in early July 2020, so almost four years now.
So along the year, we have tried and made many efforts. We have put in a lot of resources, and it's not in as good a position as we would like it to be. This year, we will make strategic changes and refine the business model. We aim to significantly reduce the operating loss. We will prioritize on building key competencies and improving user experience rather than focusing on growing scale or gaining market share. We have planned to increase the price-market ratio and reduce the subsidy in future by paying more attention to the natural retention rate and growing user cohort. Encouragingly, we have already seen some positive results in this first quarter. Operating loss of Meituan Select significantly narrowed on a year-over-year basis in Q1, and I'm confident that this trend will continue in the rest of this year. It has not been easy.
Why are we keep doing this? So I would like to remind you that the mission of the Meituan company is to help people eat better and live better. So we didn't start it; we didn't start with food delivery. We start with local service couponing deals. And later, we got into food delivery in 2013, a little more than 10 years ago. And now, every day, we serve 50 million-60 million meals. That's just still a very small percentage of all meals provided in China. So we have found a way to make online restaurant delivery big. I think sooner or later, someone will find a way to make online grocery successful. And I hope we are on that; we are going to be that one. So we knew online grocery is not going to be easy. We knew it's not easy.
It turned out it's even harder than we expected. When we look around, online grocery is not an easy job, not just in China but also in many other countries. I still believe online grocery is a very important part of how people eat, and we want to help find a way to help people eat better. So we are going to keep working on online groceries. Actually, there are several approaches we are taking at the same time. Meituan Select is one of them. The other one is Xiaoxiang Caoshi. On that approach, we are making better progress. Although still at a smaller scale, they have higher customer satisfaction rate, and also we have much better positions in competition. So I think to sum it up, here, we are going to take this kind of principle.
We are going to be stubborn on vision, but we are going to be flexible on the details. So we'll keep you, we are going to keep working on online groceries. We are going to evaluate the several approaches we are taking at the same time and adjust our strategy and resources allocation according to the market. So that's what we are going to do. Thank you.
Thank you. Thank you.
Thank you. Your next question comes from Alicia Yap at Citigroup. Please go ahead.
Hi. Thank you. Good evening, management. Thanks for taking my question. I wanted to ask, in the recent organizational restructuring, it was mentioned that the drone and also the overseas business will be reported to CEO Wang Xing yourself. So how should we expect your future development plans in global expansion and technology? What are the company's criteria when it comes to global expansion? Thank you.
Thank you. Well, thank you. First, let's talk about overseas business. So we're kind of late in the globalization of our business among all Chinese major internet companies. So we finally launched our food delivery business in Hong Kong under a brand named KeeTa last May. So it's slightly less than one year old. And now, the business is doing well, and the growth is on track. So I think the result is quite positive. Of course, at the same time, we are very actively evaluating other opportunities in other markets. So it turns out food delivery in the past 10, 15 years has become a global phenomenon. So it's doing well not just in China, not just in the U.S. It's also doing well in almost every country, either it's a very developed economy or some developing countries.
So many people are probably not aware that right now, at this moment, there are more than 10 public listed companies who's doing food delivery, not just in the U.S., not just in China, but also in U.K., Europe, and also in India, in Southeast Asia. And even in well, believe it or not, there are even public listed companies who's doing food delivery in Central Asia, North Africa, and Saudi Arabia and other countries. So it's a global phenomenon. And among all those companies, I think we are, by far, the biggest one in scale. So along the way, I believe we have accumulated know-how, both in technology and also in operational know-how. So we are quite confident we can go to a new market and find a new right way to enter the market and create value for both consumers, merchants, and delivery workers.
It's fair to say we are evaluating some other markets because we haven't made any final decision. We are not going to talk too much about those specific markets. At the same time, we know it's not easy to go to a new market in [magnetism] or become a market leader, and there are already some existing players. Here, I think our cash reserve and our free cash flow generated by our domestic business will be helpful. At the same time, we will be very disciplined in evaluating the ROI. We are not going to do some crazy all-in stuff. It turns out it takes 10 years to build our food delivery business in China. It's launched in November 2013. It's more than 10 years old. I think it has been a great journey, but it takes a long time.
So we are patient. So I think it will probably take another 10 years for us to establish a significant presence in overseas markets. So I think we are going to get there. We are in no hurry. It will take many years. We will be very careful in evaluating the opportunity and evaluating our approaches. So that's what I want to say about our overseas markets. And in terms of other new initiatives related to technology, now, both drone and autonomous delivery vehicles will report directly to me in future. And I think autonomous delivery is very important because in order to grow the penetration of online food and online grocery 10x, 2x, 3x, or even 10x in future, we have got to find new better ways, hopefully with the help of technology.
So we have been investing in both drones. We have been investing in autonomous delivery vehicles since late 2018. We have been investing in drones since late 2018. We have been very patient in these two units. We believe in the future, it will become a new component of urban infrastructure. It will take many years, maybe over the next decades. It will take ongoing experiments and investment. I believe they have strategic value for our future growth. Because of the uncertainty, I think it's better for me to lead that effort directly so that I can make a more nimble adjustment here. That's it. Thank you.
Thank you.
Thank you. Your next question comes from Charlene Liu from HSBC. Please go ahead.
Thank you. Thank you, management, for taking my question. I have a question about shareholders' return. We're very encouraged to see that Meituan has started share buyback in January. Are there any plans to further expand this buyback quarter after the current RMB 1 billion planned amount is used up? And how should we think about future shareholder returns plans? Thank you very much.
Thank you for this question. We are committed to improve long-term total shareholder return by carefully considering a combination of different capital allocation options. In our internal business development, we prioritize the capital allocation in areas that meet our high-quality ROI requirements and in areas that strengthen our competitive strength. We focus on generating substantial free cash flow growth by these investments. Externally, we selectively assess investment opportunity to bring meaningful strategic value to our core business or to help us capture new growth opportunity in our ecosystem. We will regularly evaluate the option of returning capital to our shareholders if we feel there are no good near-term investment opportunity and we have sufficient liquidity for our business. Currently, share repurchase is our preferred option to increase our shareholder return. We are confident that there are still many potential investment areas in our core business.
We believe our current stock price is substantially undervalued. Also, share buyback can help us offset the dilution from ESOP. We have kicked off share buyback in January with over $400 million worth of shares purchased before our blackout started. Now, all the shares repurchased have been canceled. We plan to continue to execute our existing share buyback program. It is likely that we may upsize our buyback program in the future if we feel needed. Thank you.
Thank you so much.
Thank you.
Okay. No more.
Sorry. That concludes our question and answer session. I'll now hand back to Scarlett Xu for closing. Thank you so much.
Thank you, Adeline, for joining the call. We look forward to talking to you next quarter. Thank you, first of all.