This song is about a guy who meets a girl (Lola) in a club who takes him home and rocks his world. The twist comes when we find out that Lola is a man.
As stated in The Kinks: The Official Biography, Ray Davies wrote the lyrics after their manager got drunk at a club and started dancing with what he thought was a woman. Toward the end of the night, his stubble started showing, but their manager was too tanked to notice.
Said Davies: "'Lola' was a love song, and the person they fall in love with is a transvestite. It's not their fault - they didn't know - but you know it's not going to last. It was based on a story about my manager."
Ray Davies revealed to Q magazine in a 2016 interview: "The song came out of an experience in a club in Paris. I was dancing with this beautiful blonde, then we went out into the daylight and I saw her stubble. "
He added; "So I drew on that but colored it in, made it more interesting lyrically."
The Kinks came up with the riff after messing around with open strings on guitars. The group's guitarist, Dave Davies, contended that he deserved a songwriting credit on the track, leading to additional friction with his brother Ray, who got the sole composer credit.
The line "You drink champagne and it tastes just like cherry cola" was recorded as "it tastes just like Coca-Cola." The British Broadcasting Company (BBC) refused to play it because of the commercial reference, so Ray Davies flew from New York to London to change the lyric and get the song on the air.
There was speculation, fueled by a 2004 piece in Rolling Stone magazine, that this song was inspired by the famous transgender actress Candy Darling, who Kinks lead singer Ray Davies allegedly dated for a brief time. This is the same Candy mentioned in Lou Reed's "Walk On The Wild Side" ("Candy came from out on the island, in the backroom she was everybody's darling").
Ray Davies, who wrote this song, told Rolling Stone in 2014 why this song didn't cause more of an uproar considering its storyline. "The subject matter was concealed," he said. "It's a crafty way of writing. I say, 'She woke up next to me,' and people think it's a woman. The story unfolds better than if the song were called 'I Dated a Drag Queen.'"
Kinks fans were not the types who would relate to a cross-dresser, but they loved this song. It opened the door for artists like Lou Reed and David Bowie to explore gender fluidity in songs that appealed to rock fans of all stripes.
Lola is mentioned in the 1981 Kinks song "Destroyer," which begins: "Met a girl called Lola and I took her back to my place."