The song is about a group of friends and two of them become lovers. And all the friends are wondering who this new girl is and why is he getting all fixed up for her. And the narrator (presumably a woman) is listening to all these rumors going around. But at the end, she settles them with the line "Chuck E.'s in love with the little girl singing this song." So she is the new girl everyone is wondering about.
The song is about a group of friends and two of them become lovers. And all the friends are wondering who this new girl is and why is he getting all fixed up for her. And the narrator (presumably a woman) is listening to all these rumors going around. But at the end, she settles them with the line "Chuck E.'s in love with the little girl singing this song." So she is the new girl everyone is wondering about.