First of all, head over to the Products section and click on Categories.
To add a new category, click on Add new category button. You'll see the below screen.
Enter the name of the category and select a category picture that you want to showcase. Click on Add Category button to save the category to your store. Once added, you can add products to this category.
Note that if you select your Business Category as Restaurants & Hotels, you will see another option while adding a category. You can choose to show this category to dining customers, delivery customers, or both.