Can menu bar items have drop-down submenus?

No.

Each item on the menu is considered a venue location. 

Think of a location as similar to a physical room within a physical venue.

The only exception is any menu items that are at the far right, if the width of the page can not support all of the words. In this circumstance, a menu item called "More" will appear, and items will appear as drop-downs under this. It is not possible to change the word "more."