If you walked out of the bathroom with toilet paper stuck to your shoe, wouldn’t you want someone to tell you? While it might be embarrassing in the moment, it would still be much better than walking around all day unaware. Think about that, and I’m sure you’ll make the right decision and be honest with Kyle. Honesty can be uncomfortable, but it’s part of being a real friend.
Kyle will understand that you’re just looking out for him. And anyway, let’s face facts—at some point, someone is going to make a hurtful joke about his breath. If Kyle finds out about the problem that way, he’ll wonder why none of his so-called friends ever mentioned it to him before.
Someone is going to tell Kyle eventually, and it might as well be you. You’ll speak to him with kindness, and that will make all the difference.