If you want to fire your coworker who is also a dear friend you have to be real with him or her.
Tell your friend why you need to fire them. Maybe they are not a good fit for the job. Maybe they are coming to late work or not getting work done.
Build them up and, then gently fire them. Tell them the positive about them, but how it is just not working out for this job.
Also, if you are afraid to speak to them about fireing them, then act quickly. The more you linger on it, the more afraid you will be. You have to just do it.