Bit of lolly found in hot cake (7)

I believe the answer is:

stollen

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'cake' is the definition.
(I've seen this before)

'bit of lolly found in hot' is the wordplay.
'bit of lolly' becomes 'l' (I can't justify this - if you can you should give a lot more credence to this answer).
'found in' indicates putting letters inside.
'hot' becomes 'stolen' (I've seen this before).
'l' going into 'stolen' is 'STOLLEN'.

Can you help me to learn more?

(Other definitions for stollen that I've seen before include "German bread" , "Traditional German cake for Christmas" , "Rich German fruit and nut loaf" .)

I've seen this clue in The Independent.

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