Friends hi-fi system not very good, what do you do or say?

I usually speak of how my understanding of audio equipment changed over the years and how certain little changes MADE A BIG DIFFERENCE.  Simple no cost changes like moving speakers away from walls or using furniture to limit first reflection will lead to owner asking about what else can be done. 

Yea, I've heard one $2500 in total system that really sounded good, and I remember a $70,000 that really stank.  In this hobby, there can be no correlation between cost and quality.

If he asks your opinion, give it.  If he doesn't, let him enjoy his stereo.  Just try to not get invited over to listen.  Offer to have him come over your house, and maybe he'll figure it out on his own and ask advise.

I remeber an old friend who was an absolutly terrible cook, and he would always invite us over for dinner . . . .

This situation has happened to me twice and both times they wanted my opinion -- neither was awful but to improve would have required better speaker placement and room treatment, both of which were not acceptable to their wives--so all i said was "sounds great, let's do a gummy--and of course after that everything sounds better--could have been a transistor radio and would have been fine.

Your opinion of good or bad is irrelevant. If you stumbled upon another person that demonstrates some dedication to this hobby, you should bond over your shared interest instantly.

Any further conversations about your subjective takes will either be solicited or not. No need to fret it. The bond over the interest is more important, anyway.

Don't be D, we have enough narcissistic ego babies in this world. Ask them about their system. Engage with them how they put it together and what was most important to them in sound. Maybe they had financial limitations, or maybe they like detailed and you like distortion or vice versa and to them yours sounds like crap or you reveal to your friend you don't make good decisions with money. See where this could be going? So be engaging, listen and appreciate your friends system. I mean if your friend wasn't as good as you at something would you tell him he's not any good bcs he doesn't live up to your standard? However if you mean this from a place of genuine narcissism and you just can't get out of your own way, then invite him to go check out a system at some audio store and let him hear some different peaces of equipment. First it would be fun and it saves the friendship from any kind of resentment due to your personal needs of everyone having to know your opinion that's not all that important in the end. Just saying....