Removing a contact from a folder in Yosemite Contacts software

I created a folder in the Yosemite Contacts program and added some people to it. I'd like to remove a contact from the folder but keep the contact in my overall contacts database.

How do I do this? The delete button deletes it completely.

Here is what I see if I select a name in a group and press delete. I don't get the dialog box above with the "Remove from Groups" option:

If I select the contact and use the Edit menu the "Remove from Group" item is greyed out: