In user's specific application there are kendo menus implemented with sub-menus to appear on mouse hover. During recording all menus can be opened as expected only if highlighting is not enabled. Once highlighting is on, the submenus are shown over the main menu and no clear selection can be made. 

Further details on the case shared internally!

Workaround: The issue could be workaround with the following steps: 

1. Keep highlighting disabled and open the menus as expected. 
2. Use click steps over the menu options to add these as elements into the Test Studio project (in the Elements Explorer). 
3. Use these elements to add the required steps from the Step Builder.