Current arrangement is a bit hard to scan because of 3 rows and 4 columns.
We can make links easier and faster to scan and reduce the amount of time users need to spend reading menus by making it left-justified and vertical.
Also this pattern will be more familiar for users due to Apple default context menu is vertical. Same as Dropbox, OneDrive, Files, Google Drive, etc.
We'd better keep that cute icons cause they can help users understand the menu options and aid faster comprehension. Also seems we have a lot of users who are accustomed to this icons and that would be easier to maintain current app style.
With vertical menu we will also have enough space to make labels easier to understand. For example we could change the most weird two "Star" and "Color tag" to "Add to starred" and "Add color tag" to make it more relevant to the user tasks definitions.
There is one more problem to handle. In current context menu you don't see to which file or folder it tied. That causes frustration, a problem for users who used to check such sings twice and a case when user can delete something important. Adding the name of file/folder and some additional info should solve this.