If the relationship is already "gone bad"; assuming (both) people aren't happy then it's just a matter of one person stepping up and saying, "It's time we went our separate ways."
Since you are only dating and not living together it should be a lot easier to exit the relationship. If you have stuff over at their place make sure you gradually remove it. On the day you have "the talk" bring anything theirs from your house. My suggestion if you plan to breakup face to face is to do it at their place. This makes it easier for you to leave after you have said what needs to be said.
If you suspect they will take it hard then try and do it on a Saturday afternoon. This will give them the rest of the day and Sunday to let it sink in before having to go to work. It also allows time for them to meet with friends or family for emotional support.
Don't offer the "instant friendship" consolation prize. The best chance of going from lovers to friends is after there has been a sizeable time gap apart. Ideally after both people have started dating others. Avoid answering their calls or responding to emails or text for at least a couple of weeks. When you do have contact keep it "business like" and short. You don't want to raise any false hopes. Best of luck!